Five Things We Check Before Approving a Single Tenant (And What Landlords Get Wrong)

I want to start with a number that should scare every landlord reading this: $27,000.

That's the average cost of a bad tenant in Victoria, once you add up lost rent, VCAT legal fees, remediation, and the vacancy period between getting them out and finding someone decent. Some cases I've seen have hit $40,000. One particularly memorable disaster in Frankston involved a tenant who hadn't paid rent in four months, kept two unregistered dogs that destroyed the carpets, and knew the VCAT system well enough to delay eviction proceedings for another six weeks after we issued the notice 1.

The thing is, that tenant looked fine on paper. Employed, tidy at the inspection, friendly at the open. The previous property manager had approved them based on a payslip and a smile.

We manage roughly 300 properties across Melbourne. Our PM-to-property ratio is 1:50 — the industry average is 1:170. That difference shows up most clearly in tenant screening, because screening properly takes time, and a PM managing 170 properties doesn't have any 2.

Step one: financial capacity — the 30% rule is non-negotiable

Before we look at anything else, we run the maths on whether the applicant can actually afford the property without financial stress.

Our hard rule: rent cannot exceed 30% of gross household income. This is the threshold the National Housing Finance and Investment Corporation uses to define housing stress, and it's the single best predictor of whether someone will still be paying rent in six months 3.

For a property renting at $500 per week ($26,000/year), the household needs to earn at least $86,700 gross. If they earn $75,000, the rent represents 34.7% of income. Too close. We decline.

We verify income through three channels: recent payslips (minimum two months), a direct call to the employer's HR department (not just a number the applicant provides), and bank statements showing regular salary deposits. Payslips alone are not enough — we've caught forged payslips at least a dozen times. A PDF editor and fifteen minutes is all it takes to fabricate a convincing payslip.

"We explicitly reject applicants whose sole income is government benefits," says Yan Zhu, Chief Data Officer at PremiumRea. "Not because those tenants are bad people — but because the income ceiling creates an affordability gap that leads to arrears. It's maths, not morality."

If the applicant's income is borderline but they have significant savings — six months of rent or more in a savings account — we'll consider them on a case-by-case basis. Savings provide a buffer that income alone can't guarantee.

Step two: database blacklist screening

Every applicant gets run through TICA (the Tenancy Information Centre of Australasia) and Equifax's tenant database. These are national registries that flag tenants with a history of evictions, rent arrears exceeding 14 days, property damage claims, and VCAT judgments 4.

A TICA listing doesn't automatically disqualify someone — the listing includes context, and some entries are genuinely disputed or resolved. But a pattern of arrears across multiple tenancies is an absolute deal-breaker.

We also run a standard credit check. We're not looking for a perfect score — we're looking for red flags. A tenant with a $3,000 Afterpay debt and a phone contract isn't a concern. A tenant with three defaulted personal loans and a bankruptcy filing is.

The cost of these checks? About $25-$35 per applicant through our subscription. Cheap insurance against a $27,000 mistake.

Step three: reference calls — and the trick with the current landlord

We call two references: the previous landlord or property manager, and the current one.

Here's the trick most landlords don't know: never trust the current landlord's reference unconditionally. Why? Because if their tenant is terrible, they have every incentive to give a glowing reference just to get them off their books. "Oh yes, lovely tenant, always paid on time, we'd have them back in a heartbeat" — meanwhile, they're dancing a jig because the nightmare is finally leaving.

The previous landlord has no such incentive. They have no reason to lie. So we weight the previous reference more heavily.

We ask specific questions, not open-ended ones:

• Were they ever more than 7 days late on rent? How many times?
• Did they leave the property in the same condition as the entry report?
• Did they have pets? Were there any pet-related damage claims?
• Would you rent to them again?

That last question is the most telling. A hesitation, a qualified answer ("Well, they were okay..."), or an outright "no" tells us everything we need to know 5.

Step four: identity and visa verification

For Australian citizens and permanent residents, standard ID verification suffices — driver's licence or passport, Medicare card, proof of current address.

For visa holders, we take an extra step: we verify the visa expiry date through the VEVO (Visa Entitlement Verification Online) system. A tenant whose visa expires three months into a twelve-month lease is a risk — not because they'll necessarily leave, but because if they lose visa status, they lose work rights, which means they lose income, which means they can't pay rent.

We align lease terms with visa periods wherever practical. If a tenant has nine months left on a 482 visa, we offer a nine-month lease rather than a twelve-month one. This protects both parties 6.

For applicants who've recently arrived in Australia and have limited rental history, we'll accept an employer reference, proof of employment contract, and three months' rent paid upfront as an alternative to the standard reference check. Immigration status doesn't disqualify someone — lack of verifiable information does.

Step five: the final call — landlord decides, we recommend

After completing all four checks, we compile a report for the property owner. The report includes the applicant's income verification, TICA/Equifax results, reference summaries, and our clear recommendation: approve, decline, or approve with conditions (such as a higher bond or shorter initial lease).

The landlord makes the final call. But in four years of doing this, I can count on one hand the number of times an owner has overridden our recommendation to decline an applicant. They've learned to trust the process.

Here's what this screening process costs in time: about 2-3 hours per successful tenancy, including all checks, calls, and documentation. For a PM managing 50 properties, that's manageable. For a PM managing 170? Impossible. They shortcut to a payslip check and a gut feeling. And that's how $27,000 problems start.

"We'd rather leave a property vacant for an extra week than rush a tenant through screening," says Yan Zhu. "A week of vacancy at $500 per week costs $500. A bad tenant costs $27,000. The maths is not complicated."

What tenants can do to improve their chances

Flipping the perspective: if you're applying for a rental in Melbourne's current market and want to stand out, here's what actually moves the needle.

Submit a complete application on inspection day. Not tomorrow. Not next week. The day of the open. Have your documents ready: two months of payslips, bank statements, 100 points of ID, your employer's contact details, and your previous property manager's direct number. When we receive 40 applications for a single property, the complete ones get reviewed first 7.

If your income is tight, show savings. A bank statement demonstrating six-plus months of rent in reserve tells us you have a financial buffer even if something goes wrong with employment.

Follow up within 48 hours. A brief email or call asking whether additional documentation would be helpful signals that you're organised and motivated. The tenants who chase get noticed.

And here's a tactical tip: avoid the highest-competition listings. CBD apartments and brand-new builds attract 50-100 applications. A well-maintained house in the outer southeast — Cranbourne, Hampton Park, Narre Warren — might attract 15-20. Your odds of approval increase dramatically when you're competing with fewer applicants.

The rental market in Melbourne is brutal right now. Vacancy below 1.5% across the southeast means landlords can afford to be selective. The applicants who win are the ones who make our screening process effortless.