PreApproval vs Application?

Welcome to Canada's Property Management Podcast, your number one resource for investing, managing, and maximizing the value of your real estate assets. And now here's your hosts, Carla Browne and Adrian Schulz, Canada's rental property experts.

Carla Browne (00:19):

Okay. Adrian, why are you laughing at me?

Adrian Schulz (00:22):

Because I'm thinking there's got to be a jingle for this, like get pre-approved. Just apply.

Carla Browne (00:29):

Well, don't you have a jingle.?

Adrian Schulz (00:31):

Oh, probably. But do you remember like 10 years ago, or 20 years ago, everyone had a little musical jingle. Where have those gone?

Carla Browne (00:38):

I don't know, but I didn't like them, because then you hear it and then it sticks in your head forever and you can never get rid of it. I think they probably still exist. You know what? I don't listen to the radio very much anymore. Do you?

Adrian Schulz (00:49):

I do. I exclusively listen to the radio, because I like the live-ness of it, that there's real people behind it.

Carla Browne (00:55):

Then you should hear jingles. I'm sure that they exist. But jingles were definitely a marketing thing way back when.

Adrian Schulz (01:02):

I'm going to bring it back.

Carla Browne (01:03):

Okay. Okay.

Adrian Schulz (01:04):

Watch out Charlwood Pacific Group. We're bringing back the jingles and the yellow jackets at Century 21.

Carla Browne (01:10):

I loved my yellow jacket. Mine was gold. It wasn't yellow.

Adrian Schulz (01:13):

Fair enough.

Carla Browne (01:14):

Very different. The colors are very different. Okay. We are talking pre-approvals versus application today, Adrian. And this is an interesting topic and I thought we could spin it, because pre-approval is one of those words that is in your lingo. You talk about it every day.

Adrian Schulz (01:32):

My two lingo words are pre-qualification and pre-approval. Not the same. And then, of course, how do we apply that in the rental space?

Carla Browne (01:43):

So this is how it works traditionally. You advertise a property, people call on the property, you run out and show the property. Most of the people who called on the property don't show up for that showing. You get frustrated or you talk to somebody. Maybe you're going to find one that is going to move to the next step and you're going to hand them an application after talking to them. And most of them who you talk to, you're going to be like, "You're not going to be remotely qualified for this property," which you got to be careful with human rights. I just want to be careful on how I word that. So COVID brought a lot of changes for the property management space that this was one that I think could stick around forever. Because we've made changes in some of our offices that now instead of going through all of those motions and hoping that the person who called you and expected to be shown a property within 20 minutes, that you dropped everything to run out to, people still do this. I know.

Carla Browne (02:41):

And you need to stop. People, you need to stop this. It does not need to be that urgent. And now you're able to qualify the leads, very similar to a mortgage broker being able to qualify the individual to see what they actually can afford for a house. Now you qualify the lead to understand is this the right house for them? Do they need something in a different area? All of these things, because a lot of times people look at a property and it's not even suited to them. And from my real estate background, I know I'm kind of going all over the place, it's like an open house. People come to an open house. Most of them aren't remotely interested in that house after they see it, but now the realtor can be showing them what else is out there in the market.

Adrian Schulz (03:22):

The benefit of being pre-approved for a rental home isn't just for the landlord. It's actually equally, if not even more beneficial, to the prospective tenant, because they're not wasting their time looking at homes that they will not get approved for. And it really sets a great tone for what can they afford. What monthly rent can you afford? And now when you're searching for homes online, you know to filter it to between 900 and 1,200 or 1,000 and 1,300. I think it's of great benefit. And I think that we're actually going to see this trend, like you said, continue, where when you look at a rental listing, you're going to click on get pre-approved, but then you can take that pre-approval with that landlord and go and look at all their other available rentals too, which is a great benefit knowing that you already qualify for them.

Carla Browne (04:22):

So I would say our technology doesn't have that button yet, but we've been able to try to put it into the communication, so people understand. And also technology is allowed for virtual tours to be posted. So somebody goes into one of our listings, they're going to be able to get a nice feel for the whole property. So they're not feeling like they're trying to get pre-approved for something that they're not remotely interested in. And it also takes the fear out of especially new tenants. They don't know what they can afford. They have no idea. They think that they get paid X and they can use that for rent, but they don't necessarily know how that all works. So I don't think the change has had a negative effect at all. It's been some explaining for our investors.

Carla Browne (05:04):

So our investors need to understand it's always quality over quantity. The idea of putting ads out there on a lot of different ILSs or internet listing syndications, which we do easily through our website. We have that technology, but just because you get 30 leads on a property, doesn't mean that your ads are working really well. You want to make sure that you're getting the right leads. So it's making sure that you're on the right ILSs, you're attracting the right type of tenant for that property. And then going through that pre-approval process. And then once you're pre-approved, you want to move to the next step. Then we're going to show the property physically, go and meet them, walk them through the property. And then usually it's pretty much lease signing. It's almost a done deal at that time.

Adrian Schulz (05:48):

I think it's going to be very exciting. Later on this year, we will actually launch a pre-qualified calculator on the realpm.ca website, where tenants, just nationally, and anyone is welcome to use it, will be able to enter their income and their monthly expenses and then calculate an estimate of what monthly rent that they may be able to afford. And that way they're not wasting time when they're looking at different internet listing services. So watch out for that coming later on this year to realpm.ca

Carla Browne (06:26):

Because we're really transparent with our listeners, Adrian, I got to call you out on that. You just literally added that to our website, while we're talking on this podcast, didn't you?

Adrian Schulz (06:36):

Yes, I did. And it is because of your mind and intelligence that enabled me to add a deliverable to our PM technology department. So thank you.

Carla Browne (06:48):

Look at the synergy, look at the synergy. Okay, so let's go back to the appointment piece. So let's talk about what is the appointment really for? Is the appointment for you as the landlord? Is the appointment for the tenant? What do we want to actually do when we're going to show the property? Because this is something I talk about it in our office here locally. It's like anything, it's a presentation. So who are you actually showing the property for and what are you actually looking for? If you've got them at this point where they can afford it, because you've done the pre-approval, what's the actual appointment for? Any ideas there?

Adrian Schulz (07:25):

Well it's for the tenant to see if they like the home, but also for the landlord to see if they feel that the tenant would be a good fit for the home. And it is absolutely not in a discriminatory way. What it is if we see that you have three children and two spouses, that's five people, you are not going to fit in a one-bedroom apartment. And if you have a donkey or a pig as a pet, it also may not be a fit. You'd probably want to be in more of a rural area. So it's a two-way vetting process. I don't know if you have donkeys or pigs as pets in your units.

Carla Browne (08:08):

I find it interesting that you said that all with a very straight face, that you could have two spouses, a donkey and a pig.

Adrian Schulz (08:16):

And I'm all of those combined. My lucky wife.

Carla Browne (08:18):

You're always a storyteller. So I almost felt like there was a story behind that one that was going to come out, because we don't show properties to many people who have two spouses, a donkey, and a pig. Okay. You've either had too much coffee or not enough this morning. So, yeah, the showing is really important. But the other thing that the showing allows you to do is that sometimes you've done a move out, so this is a property that maybe you've done a turn on, you've done a move out. And when you're showing the property, you might notice some things that maybe need to be rectified before a move in. And you also understand how a tenant is moving around the property and things that might be important to them.

Carla Browne (08:54):

So it's getting all those expectations underway so that the tenant knows how the property is going to be when they move in and you know what is important to the tenant when they move in, then you can maybe address it. So it's a lot of listening. And that's really what we have to do when we're dealing in business is that you got to listen to what is important to people. So it always gives us those little clues there, but it's a little gut check that comes into play. But most definitely is for both parties to really understand that, "Hey yeah, we're a good fit and we want to go through with the property." And does eliminate all those no-shows. So please, please, please [inaudible 00:09:27]-

Adrian Schulz (09:27):

Oh, yeah. Don't you love a Friday, 5:30 showing and then they don't show? That could have been your second beer o'clock round.

Carla Browne (09:35):

Yeah. Our property manager ended up with COVID last month. He went all the way to last month without having COVID. Had COVID. He did have a bunch of showings, a handful, just the time of the month that needed to be done. So our business development manager went to do them and he's texting us in the group chat and he's like, "Okay, I'm here. And this person isn't here." And he's like, "Is this normal that I'm getting a no-show?" And it's like, "It's not in our process." So he was at the wrong building.

Adrian Schulz (10:05):

Oh no.

Carla Browne (10:05):

He was at the wrong building. So we had to walk him through it. It was pouring rain.

Adrian Schulz (10:09):

Poor guy.

Carla Browne (10:09):

He was a drowned rat. He's a good sport about it all. But I'm kidding, but not kidding, it does eliminate a lot of those no-shows, which are super, super frustrating. It's a waste of time, energy and money, when you have it. So anyways, pre-approvals definitely the way the market's going. We're going to be first to market with our [inaudible 00:10:29]-

Adrian Schulz (10:28):

Our pre-qualified calculator on realpm.ca, invented on Canada's Property Management Podcast.

Carla Browne (10:36):

Now that's real property management.

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