The following is a story about laziness, inexperience, false-bravado, misunderstanding, and a wicked sense of entitlement.
It’s also a story about misconceptions that exist in the rental market, based on an uniformed opinion about social equality.
Overall, it’s really just trying to put the cart before the horse…
After seven years, and 1,201 blog posts, I can honestly say that I’m still trying to figure out which topics will produce the most opinion and conversation on the message board.
A good political debate always gets readers to crack their knuckles and begin typing, but when it comes to real estate blog posts, I still never know.
Stories about multiple offer situations seem to bring out the real estate bears, and anything about personal finances will lead people to opine.
But there’s one other topic or idea that always gets people to speak up, and that’s the notion of the social-left trying to put restrictions on the free market, with their ideas about societal values and norms, and how they should apply to capitalism.
I’ve written about the rental market before, and we’ve covered the theory behind “discrimination.” Most of the people who commented last time were of the opinion, “If I work hard and generate enough savings to purchase an investment property, I’ll be damned anybody is going to tell me who I can and can’t rent to.” To claim discrimination may be a stretch, but many of my readers have gone on record saying they don’t care!
My story today has to do, yet again, with this subject, and the bizarre perception that much of today’s society has about rights and privileges…
I have a condominium listed for lease at $1,599 per month.
It’s not a luxurious unit, but it is a condo unit for lease, and in today’s market – that puts the owner/landlord in the driver’s seat.
Vacancy rates are 1-2% in Toronto, and any property listed for lease in Toronto is bound to generate first-day inquiries. If you’re bored, and want to test this theory – post an imaginary 2-bed, 2-bath for lease in Leslieville on Craigslist or Kijiji and see how many emails you get.
I told the owner of the unit I have listed for lease that it’s not finding a tenant that’s the hard part; it’s finding a suitable tenant, and one you essentially want to “partner” with for the next year or more. This person is going to be living in your investment, and you want them to take care of it, respect it, and pay their rent on time!
When I list a property for lease on MLS, I put the following note in the remarks for brokers: “Please Include Equifax Credit Check, Employemnt Letter, References, And OREA Rental Application With All Offers.”
That’s fairly standard, right?
Perhaps not, it would seem, based on my experience last week.
I received a call from an agent who said that he had shown the property to his client, and the client was interested in making an offer. I told him I’d take a look when he sent it, and kindly reminded him to include the necessary documentation – credit check, employment letter, references, etc.
He responded, “Well, if you’re going to accept the offer, then that’s no problem.”
I was driving at the time, and probably typing on my iPad, Blackberry, Nintendo Entertainment System, and Sega Genesis, so I didn’t quite hear him so clearly.
“Great, does he have a good credit score? Do you know what it is off-hand? What’s his income?” I asked.
There was a pause, and the agent responded, “Well, geez, I don’t know if that’s relevant.”
Hold the goddam phone, for a moment.
Since when is your income not relevant in a financial transaction?
I paused my game of Bad ‘n Rad on my Gameboy, pulled over, and started to take a greater interest in the conversation.
“You have pulled a credit check on him, right?” I asked.
The agent replied, “No, not yet. We want to know if you’ll accept the offer, first, then we’ll get you his employment letter and whatever else you need.”
Was I REALLY having this conversation?
Talk about putting the cart before the horse!
“Neddy, the home-buyer’s guide says to actually go inside the house before buying it.”
I asked the agent, “Hold on a moment here – how am I supposed to make an informed decision about this tenant’s candidacy without his credit check and employment letter?”
The agent replied, “Well he has his first and last month’s rent, and he’s been a tenant before.”
Wow. I could have just hung up the phone, since I had a pretty good feeling that this agent and I weren’t really compatible for doing a real estate transaction, but I had to know what other thoughts he had on this process.
I told him, “What I need is a credit check that shows your client’s credit rating, his debts, his delinquency record if that applies, as well as where he works, what he does for a living, and how much money he makes. I need this information to decide IF we’re going to rent to him, and after looking at this information, perhaps my landlord would like to meet with him for a brief interview.”
This is where things took a turn to the um…..left, if you catch my drift…
He responded, “You don’t need to know about his credit history – that’s personal! He’s young, and he may have made some mistakes in the past. And his employment – that would be on the rental application itself. Is it really necessary to have him bother his HR department at work for a letter? And what do you mean ‘decide if you want to rent to him?’ If he has his two month’s deposit, he’s a suitable candidate.”
Left hook, right jab.
“Well, if he has bad credit, and he doesn’t make at least $55,000 per year, at a job he’s been at for 18 months or more, then my client won’t consider him a candidate,” I told him.
“That’s pretty discriminatory,” the agent told me. “Don’t you think?”
“No, I don’t.” I told him. “I think it’s a very standard business practice, and it’s being responsible. Do you really expect that a landlord would lease to a tenant with bad credit, who doesn’t make enough money to carry the property?”
I thought the question was rhetorical. This is all pretty standard, right?
What’s the difference between a bank making sure a mortgagee is qualified and a landlord making sure a prospective tenant can pay the bills?
There’s this bizarre idea out there in society that any applicant “should” be able to get a property that they’re interested in leasing. I come across this over, and over, and over!
If we truly live in a free market, where capitalism is the soup de jour, then a property-owner should be able to lease his or her property to a person that he or she believes is qualified, at his or her own discretion.
Does this open the door for discrimination? Perhaps.
But can’t we rephrase “unemployed woman with dependants and poor credit history” as something like “adorable single mother” if we were so inclined?
So perhaps discriminating against a single-mother isn’t as cut and dry as electing not to lease to a person who isn’t qualified financially.
I’m tired of certain segments of society acting like fiscal responsibility automatically leads to social injustice. If the government wants to provide affordable housing, and the taxpayers are going to absorb the cost, then that’s fine – I’ll pay my share, gladly. But if the individual who invests in real estate and takes on the associated risks is expected to rent to the first person that raises their hand, qualified or not, then I have a big problem with that.
If you cross the street, you look both ways.
If you get behind the wheel, you do up your seatbelt.
And if you look to rent out your investment property, you do a thorough check on the applicant, and make an informed decision based on their finances and personal circumstances.
These three things can all be described as “being responsible.”
Since when is the expectation among the renter-pool that having a cheque for $3,200 is the ONLY prerequisite for leasing a property?