One of the most difficult jobs the landlord has is finding the right tenant for a rental property. And the screening process can be just as hard for the person who’s applying as it is for the landlord. My guest this week has created a tool that makes the entire process easier for both the landlord and the tenant. He joins me to discuss how it all works. Chad Cuziewicz is a co-founder of Rentify, an instant screening tool used to verify tenant application data by landlords and property managers across North America. Chad is a two-time startup entrepreneur and previously had extensive experience in the property management industry, which fueled his inspiration to start Rentify. 

 

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. This episode of the Maple Money Show is brought to you by Willful. Did you know that 57 percent of Canadian adults don’t have a will? Willful has made it more affordable, convenient and easy for Canadians to create a legal will and power of attorney documents online from the comfort of home. In less than 20 minutes, and for the fraction of the price of visiting a lawyer, you can gain peace of mind knowing you have a plan in place to protect your children, pets and loved ones in the event of an emergency. Get started for free at maplemoney.com/willful and use promo code Maple Money to save 15 percent. Now, let’s chat with Chad… 

 

Tom: Hi, Chad. Welcome to the Maple Money Show. 

 

Chad: Thanks for having me. 

 

Tom: I heard about this new company you started. And this isn’t a paid spot or anything. I just wanted to have you on because it’s a very interesting concept and I think it’ll help a lot of people out. I’ll let you talk about in a second, but done other episodes on real estate investing, being a landlord, and maybe hiring a team (because you don’t want to be a landlord) and I still felt a little unsure because, if I were to get into this extra income stream, I wouldn’t want to spend it all on a property management team. I also don’t like the idea of getting a bad tenant. What I wanted to talk to you today about is how we can vet a decent tenant. Just to set this up for people, can you tell us about Rentify and what you do. That might help explain what we’re going to talk about. 

 

Chad: Rentify is a different way of looking at verifying tenant’s information. The standard today is credit checks and there are some background checks and stuff. But really, we came with the concept of using bank checks. We take 12 months of bank statements and analyze it for landlords to look at certain things. The reason that’s important is that as a landlord, you get a bunch of information like payroll, pay stubs. Did they pay their previous rent? Government income. How do you validate that? You can get their references and call their previous landlords or call their employer but you just don’t know. When I was a landlord, I always found that was the most challenging part at the beginning. What we tried to do is make it simpler and faster, because on average, if you get a bunch of people applying, it takes about two hours to really validate their information. And you don’t know if it’s 100 percent accurate or not. With our system, the tenant will connect with their bank. They’re using their username and password, but nobody gets access to it. We just get the raw statements and we analyze that. So now, if they say they’re getting payroll, we actually go in the bank account and see the payroll. It’s itemized there. They tell us the previous amount of rent and we actually go in and look for the rent payments. Then you know they’ve been paying the rent. Done. We can tell you what their average payroll is. We can tell you what their average closing balance is so you actually know at the beginning of the month how much money they have. We tell you how many days they’re in overdraft. We actually validate that the name matches up to the bank account, which is important because you want to make sure that’s legit. And we tell you if there are any payday loans or any of that kind of information that you really need to know to make the best decision for your property. And landlords will know in the end who is the right person. We’re just helping you validate the information that you need to make the right decision. 

 

Tom: Yeah, I really like this idea. I like using technology to help things out as much as I can anyway. And that’s what I’m liking about this concept. Can we take it back to when you were a landlord and what it looked like to find a decent tenant? I’ve seen on one side, someone’s house gets destroyed by a tenant. And on the other side, I used to live beside someone that was renting a townhouse for 30 plus years. And that seems like a perfect tenant. How do you find that difference? How do you find what will turn out to be a nice old lady that rents from you for 30 years? And how do you avoid these people that are going to miss payments and potentially trash the place? And then that goes beyond finances, too. There’s got to be a bit of a “feeling out” process of that potential tenant. 

 

Chad: I was a landlord and owned a 10 plex so I agree with you. I had a couple of people who were older that were in there for a long time with no issues. But then there’s that middle tier where you don’t really know. I had a younger couple I moved in at one point. On their paperwork, they said they worked full-time. But in the end, I actually found out they didn’t work full-time. They lied on their application when I moved them in. So there were challenges for me to verify the information. You get a really good test on the people when you meet with them. You see their behaviour and the way they are. And that’s kind of what you’re really looking for, a certain behaviour. People that are responsible, who pay for their stuff usually are going to be good for the place. There’s a story about Canadian Tire where they used to give out cards based on people buying things, like felt pads for the furniture. If you cared enough to put felt pads on your furniture, you cared enough to take care of the place. You’re trying to look for that certain type of person that is responsible. They’re good, they’re clean, they’re nice, and they’re just a responsible type of person. And really, you get a real feel when you’re with them. That’s what I’ve seen through my experience. There are bad ones too. I had a bad one that moved in where they actually poured tar down the piping because they didn’t like the experience. I had to replace all this stuff. It was a total nightmare. Getting them out and going through the whole process was brutal. 

 

Tom: They poured tar down on purpose because they didn’t like you? Or was this just an accident where they weren’t thinking about what would happen? 

 

Chad: The guy had a substance abuse problem. I guess he got angry one night because he was behind in his rent and I was asking him to give me the rent. He got mad and poured this tar down all the piping. There was $13,000 worth of damage. It went through the entire building because he was on the top floor. 

 

Tom: Those are the horror stories I worry about. Having a 10 plex you must have seen a lot of variety of people. Did you ever have a case where they looked like a good tenant, to begin with and then things changed? Maybe they lost their job and things went downhill from there? Or did you always sort of get a good reading on them at the beginning?

 

Chad: I usually got a good reading. The one I told you where they lied on their application and I couldn’t validate their information? They moved in and became a problem because I thought they were both working at certain jobs. One person wasn’t and the other person was only part-time at that job. It became a problem collecting rent from them because I didn’t realize what they told me wasn’t accurate. 

 

Tom: It’s been probably about 20 years ago but I do remember, as a tenant, going through the process felt like a job interview. Were you doing all that, asking certain questions and checking references? 

 

Chad: Yeah. When I bought it, I was also renting at another large organization. I took their actual signup form and used that to actually ask the tenants all the information I needed to know to move them in. But it does sometimes feel like a job interview. I can’t blame tenants because of the challenges. As you can imagine, if you’re a tenant, applying to 10 different people, they’re going to want 10 different things. It’s always hard to provide what they need. I always feel for tenants because it is challenging for them too because they are looking for a place and there are so many. It’s similar to the housing that’s going on here in Canada. It’s like a mad rush. They think, “Oh if I don’t do this, I won’t get into this place…” It’s tough for them too. 

 

Tom: Yeah, I’m not sure how I feel about housing right now. I’m glad to be in the market already. In a way, I don’t need to care. But it’s still nice to know which direction it’s going. If I was someone that wasn’t in the market, then I think I would feel like it’s a bubble. But it’s never seemed to change recently. 

 

Chad: Oh, it just seems to keep going up and up. I don’t know when that’s going to stop. 

 

Tom: Yeah, I don’t want anyone to make my predictions in any real way because it feels like a guess. But I’ve thought it was a bubble for 10, 15 years and I’ve been wrong all along because it just keeps going up. 

 

Chad: You know, that’s a great story because my dad keeps saying the market’s going to crash. And one day when it crashes, he’s going to say, “I told you so!” 

 

Tom: Yeah, exactly. It will crash at some point. Speaking about the pricing side of this, as a landlord, how do you decide the rent that you’re going to charge? Is this something that you equal to the mortgage or do you ensure you have some cash flow? How do you decide what that rent amount is when you have a tenant? 

 

Chad: You have to do both. You need to understand what it’s going to cost me. What is my mortgage? Are you doing all-inclusive or are you going to have the tenants pay for certain things? Are you going to pay for one thing? You’ve got to understand what the property taxes are in the area because different cities have different property taxes. That’s how you kind of decide. And you probably want to make a little extra so you have some cash just in case the roof needs to be done or something else needs to be done at the property, so you have a maintenance fund for the future. 

 

Tom: Yeah, that’s the other thing I was kind of concerned about, this idea of being a landlord and having tenants. Just going back on your past experience, what does that look like with repairs? Again, it’s been a while for me (as a tenant) but I remember the washer or dryer… I don’t remember which one it was. It may have been the washer because I think it was actually leaking so they had to come and replace it really quickly. It seems like a lot of extra hassle there, too, where you’re sort of on-call. This is one of my issues. Do I want some kind of property management or do I want to be a full-service landlord? 

 

Chad: It’s both. If you’re going to do one unit you’re probably not going to hire a property management company. It depends on the size of the property. If you want multiples, then you might consider that or you might build your own property management company. It depends on what you want to do. But it’s all part of maintenance. It’s no different when you own your own house. You’re going to have things that break at your house you’ll need to repair. You give the tenants a place to call or email you so they can say, “Hey, this came up. I just wanted to make sure you get it fixed.” It’s no different than you wanting your own stuff fixed. You just make sure you have enough cash flowing so you can actually manage whenever a washer or dryer breaks. That way there are no issues for you where you’re in a panic mode thinking you don’t have enough cash to fix certain things. You just predict when things are going to go. You say, “I know in 10 years the roof is going to go so I need to leave at a certain amount of money to fix the shingles on the roof.” Or “The windows are going to go in 10 or 20 years…” That’s how I set it up and how I made my own decisions. I managed it myself. I had a separate phone from my main phone. I didn’t want them calling my personal one all the time so I had a separate phone they could call. 

 

Tom: You mentioned this idea of planning ahead for that so I assume you budgeted all these potential expenses. I would guess there are probably landlords out there that probably don’t plan ahead for this. If they’re running it really narrow in the “mortgage versus rent” maybe they’re not planning ahead for this stuff. I like that you did do that. You kept a bit of a cushion there so you could afford those when they come up, 

 

Chad: And they always will come up. No matter what you do, they’re going to come up. I was doing that some five years ago. The pricing has changed so much that it may be tougher for some landlords to have that extra cash. And it gets challenging based on the price of real estate. It is tough out there. 

 

Tom: Yeah, that’s what I’m seeing more and more too. I think that’s part of the issue I’m having with this rent versus mortgage question. It seems like if you were to buy a place right now, it might actually be hard to get someone to pay you rent that would actually cover the mortgage because everything’s so overvalued right now. 

 

Chad: Yeah, especially in Ontario. But some parts of the country are okay. I hear that some landlords are buying in other provinces because it makes sense financially. 

 

Tom: Yeah, I’m in Alberta and we don’t look like Toronto or Vancouver, but we’ve had huge increases. I think I just read recently that it’s about 18 or 19 percent year-over-year. Obviously, that’s a huge increase. But one of the things that keeps it a bit in line around here is that we can just keep sprawling. We threw up a new neighbourhood that has 100 new houses and a bunch of townhouses and that happens pretty often. 

 

Chad: Yeah, that makes it a lot easier. When you’re in dense, dense and there’s no more land to build it gets really tough. 

 

Tom: Yeah, I see that, especially with Vancouver or something. Where else are you going to go? 

 

Chad: Yeah, other than up. 

 

Tom: Yes. Yes exactly. Now what about the budget of a tenant? Do you talk to them about that? Not that you’re trying to do their whole finances for them, but do you try to get a feel when you’re talking to potential tenants of what they make and what they think they can afford for rent? Do you kind of work through that with them or do you just say, “This is the rent…” and let them sort out whether or not that works for them? 

 

Chad: That’s a great question. And that’s probably one thing that landlords today don’t do. If you look at the Bank of Canada, it recently just changed its stress tests to make sure you can afford it. Even when I was doing it, I didn’t think about that stuff a lot. Our product is probably the best thing to do that with, today, because we’re analyzing their expenses against what they make. And that gives you a better understanding of where they are. Banks have been doing this for years. When you bought your place and I bought my place, the banks were doing all this to make sure you can afford that. And that’s something I believe landlords are not really doing today—making sure somebody can long-term, afford the place they’re moving into. 

 

Tom: Yeah, one of the numbers I had heard is that their gross income should be three times rent. It’s just kind of “napkin math” but similar to the mortgage, it’s just a way to figure out if they can handle that. Because even with perfect credit and a full-time (maybe lower paying) job, they shouldn’t really be spending 50 percent or more on rent alone or else they’re going to probably run into problems further down the road. 

 

Chad: I agree with you. And that’s something landlords really have to start thinking about doing today. As prices rise, you’ve got to make sure that people can afford it. It’s not a stigma not to do that. It is important because, in the end, if banks believe that we would have done it properly, then why are they doing it on us when we go buy properties? Landlords actually need to do the same thing. You have to check. You shouldn’t expect your tenant to do that. They’re not taking the long-term, financial burden you are. I think it’s important. 

 

Tom: Yeah. And to me, it just seems like a good additional way to vet that tenant. You want to make sure they have some leeway so that you have some leeway. If you need to increase rent in the future and they’re just barely making it and maybe even starting to slowly, slowly rack up some debt, it’s only going to compile over time. 

 

Chad: Yeah. If they’re going to run into a financial problem, they’re going to run it with you because you’re the largest expense on their bill at the end of the day. 

 

Tom: Yes. Yes, exactly. I do think that Rentify is a great way to do a lot of what was previously done manually. But what did that manual process look like? How much groundwork were you doing? You mentioned it briefly at the beginning, but were you calling references? Were you asking for certain paperwork like paychecks and going through all that? 

 

Chad: Yes, I went through that process. I actually had to check the references. I would call. I would get them to put on their income. It was hard to get statements to really understand how much money they had. It was tough to do that. You kind of just took an idea of what they had rent-wise. You try to do your best, honestly, to try to verify the information. But it was tough and you didn’t know. Today, it’s easy for banks to just go in and analyze. The technology does it for them. It’s harder when you’re doing it manually, honestly, a lot harder. And it takes at least two hours by the time you get the paperwork to go back and forth. And even if they gave you paper statements, they’re going to go in and blank things out that they don’t want to show you. That would probably take an hour if you went through that, even if it was three months. 

 

Tom: Yeah, it does sound like a lot of extra effort, which is what I wanted to avoid. Now, one of the questions I had about Rentify is, how does it get the information? I assume the potential tenant has to log in or something and authorize this? 

 

Chad: So what happens is, a landlord will create a unique link for their property. They’ll send it out to the tenant. The tenant will create an account with us and agree to sharing the terms. We have connections with the banks so it’s no different than if you log into your own account. Nobody gets access to your card number or your password. We get the raw statements and have an algorithm that analyzes all the stuff that matters to landlords. We strip out the stuff that really doesn’t matter to them—that’s not important to them. We provide the key information a landlord needs to make the best decision. And it’s done in a minute or two. It doesn’t take long. 

 

Tom: Does the landlord just see what Rentify has compiled for them? They can’t actually look at those individual lines, right? Or is it just a result or what they paid in rent and how much money they make?

 

Chad: Yeah. We categorize certain things. We have a categorization for payroll so you see all the payroll statements coming in—and bill payments. We have a spot showing you all the utilities, all the phone bills, any government income. We put that in there so if they’re getting baby bonuses and that kind of stuff, you can see that. And then we show any other income because some people might be getting from stuff from stock market money coming in, retirement funds and stuff like that. Then we summarize the payroll at the top. We summarize their other income because you get other sources of income, their average debt loads and their days in overdraft so you can get a good picture. And if there’s any payday loans or any NSFs checks in the account. 

 

Tom: Oh, it actually calls those out and tells you of any risky expenses that would be seen? 

 

Chad: Yes. Just so that the landlord’s prepared for those things. They see everything. 

 

Tom: Sorry for so many questions about Rentify. If I don’t want to make this sound like an infomercial. Like I said, this isn’t paid. I’m just really interested in what you’ve got going on here. What if the renter was someone was like me? I deal with multiple credit cards. I’ve got a savings account in one bank and a checking account in another bank. Do you guys allow this? I would have to approve so many things. Do you have that connection or is it just a checking account check? 

 

Chad: We get everything that’s within that same institution. So, if you have everything within that institution, we get all that information. If you have a separate institution, you have to log in. It’s just giving you all the information the landlord needs. It’s pretty simple. 

 

Tom: But are you able to take, say, two, just to keep it simple? Maybe my bills were paid on a credit card, can you take two and compile that into one report?  

 

Chad: Yes, if you have multiple banks—different banks and different credit cards, we can put it all together. You may have to log in separately, but it can all be compiled together. 

 

Tom: One more question ahead about this was, does this potentially scare off decent tenants? Say I’m a super cautious person. I’m great with my money but I’m worried about security. And personally, I’m not even concerned about your security. I get it. I’ve dealt with these kind of questions for about 15 years with people being worried about things like Mint connecting to your bank accounts early on. So, I’m not personally concerned about it, but I know a lot of people are. Does it sometimes scare off tenants? Have you heard of people saying, “I’m not going to do this,” when the landlord requests it? 

 

Chad: Before we launched to the public, we actually worked with one of the landlord associations for a year because we wondered, would people actually do this with tenants or are we crazy? We did it and worked with tenants through the process. And as we’ve gone farther, we’ve actually found that tenants are starting to like this process better. I would have never expected that at the beginning but they’re all telling us that they love it because it’s so much easier. The great analogy of this kind of stuff is I always think of Blockbuster and Netflix. At one time everybody went to a store to get their video and popcorn. Then Netflix came around and revolutionized how easy it was just to be at home, connect, and see all the movies. Yeah, I use that analogy in our business because it’s just easier. Technology, in the end, makes our lives easier. That’s why we do things. That’s why you’re connected to Mint too. It’s because you wanted an easier way to calculate your expenses. You want the system to do it for you instead of manually trying to do that. And that’s kind of what our system is doing. It’s actually helping tenants speed through the process faster because now they’re not waiting two hours confirming it. It’s all done. You’re done and you can move on to the next. With good tenants there’s no issues and even middle-of-the-road people that don’t have great credit scores, this actually helps them because you can show a landlord that you pay your bills and you do everything. They might have had something bad seven years ago that’s keeping their credit score down, but now they’re good. 

 

Tom: Speaking of credit scores, what does the normal process look like if someone’s not using your product? How do they do that? I’ve never actually understood that. I know how to get my credit score, but I don’t know what a landlord does to get someone’s credit report. 

 

Chad: There are multiple services out there that you can use to get a credit score. It dings your credit score. I never understood that, honestly. You’re trying to get a score and give it to show people, but if you ask for it, you get dinged for it. It’s kind of a weird concept. We have this secret number that you’re not allowed to double or something and you get hurt for it every time you ask for it. So, landlords will go out to things like Equifax, credit unions and stuff like that to try and get that and it gets dinged. With our system, you don’t get dinged. It doesn’t hurt your score or anything. And honestly, I looked at a credit score before and don’t even understand what it means, honestly. It’s like this huge thing and you wonder what half of it even means. 

 

Tom: Yeah, the whole digging thing is the hard check versus the soft check. You guys must do the soft check which is where you say, “Just give me the number.” Where a hard check gets dinged because it’s as though you’re showing interest in taking on debt. If you’re all of a sudden applying for a different mortgage every year and different credit cards, that’s why you start to get those dings that way. But do you know what someone normally pays for a for a credit score as a landlord? 

 

Chad: I think it’s about $35—anywhere from $30 to $50.  

 

Tom: And again, I’m really not trying to be a promo, but how much does Rentify cost? 

 

Chad: We charge the landlord $9.99. 

 

Tom: Yeah, I like that. Do you include a credit score with that? Or do you include more important stuff? 

 

Chad: In our system, we start with a bank check. We also have an ID verification. A person can take a picture of their ID and their face which matches up. And we also have credit score in our system. If a landlord still wants to do a credit score, they can actually do that through our product, too. 

 

Tom: Is that an additional cost, though? 

 

Chad: Yeah, it’s an additional charge. 

 

Tom: That’s reasonable. I like the idea that you can do all this vetting for $10. One more thing I thought I saw on the site—and correct me if I’m wrong, does it also organize tenants? Before you even pay and vet them, don’t they apply through there? Or did I miss something there? 

 

Chad: We built it… I was a small landlord and always found I was doing everything on paper. So we’ve created where you can actually take your rental application and put it into our tool. You can ask all the questions and all that stuff, and there’s no charge to get as many tenants as possible. We only charge when you run the banking part. So, you can have as many people apply then you say, “Okay, I want these last five people. Run a bank check on them. We’ve built it so you can do that. 

 

Tom: Yeah, I like that too. Like I said, I’m not a I’m not a landlord, but I’m interested in the idea and this just feels like it’s something that’s taking some of the concerns away from me. I like your example of where someone can change. In that example, you probably you would have actually caught that because you would have had their paycheck. But beyond that, there certainly are other risks that people need to keep in mind. If someone loses their job and two months later they still can’t get another one, there’s certainly financial risks to being a landlord. 

 

Chad: Of course, and that’s always going to be around because can have a plant in a town and then it shuts down. Nobody can predict for that. It’s no different if somebody had a mortgage and they lost their job. What you want to do is try to help the tenants. In the end, it’s a relationship, a long-term relationship that you’re trying to solve. You want to make sure they’re because if they’re successful, you’re successful. 

 

Tom: Yeah. Well, thanks for running us through all this. My goal, if I do get into real estate investing as the landlord, is to find that 30 year tenant that can kind of just make things a lot smoother on me. I like the idea of this product. That’s why I wanted to have you on. Can you just tell people where to find you in the company online? 

 

Chad: Yeah. So you just need to go to www.trustrentify.com. You can sign up if you want to. We’re right there. If you have any questions, call us to help out. 

 

Tom: Thanks for coming on the show. 

 

Chad: Thank you for having me. 

 

Tom: Thanks, Chad, for explaining what goes into finding a tenant for a rental property. The thought of becoming a landlord has always made me nervous, but the prospect isn’t quite as scary after our conversation. You can find show notes for this episode at maplemoney.com/156. Are you new to the Maple Money Show? If so, I want to thank you for listening. In case you weren’t aware, you can watch videos from any of our top episodes over on our YouTube channel. If you’re interested, head over to maplemoney.com/youtube. Make sure to “Like” the video and hit the subscribe button. I appreciate the feedback I receive from my listeners and want to thank everyone that’s taken the time to email me or share their favourite episode in a Tweet. It keeps me motivated to keep bringing in new guests and great topics. Thanks for listening, and I’ll see you back here next week.