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How to Get a Co-Signer to Make Your Lease Worth a Lot More

by Mark Purtell on February 9, 2013 · 2 comments

  
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All landlords hate vacancies, but they should never compromise their revenue stream at the chance of renting to tenants with marginal, or not existent, credit history.  I would rather have a vacancy than take a shot on a guy like Lloyd Christmas:

Often you will get tenants, such as students or young adults, who are renting their first apartment and will have unproven credit.  This is not to say they will be non-paying tenants, but extra caution should be taken before renting to them.  This is where the co-signer comes into play.

The Three Most Common Co-Signers

The co-signer is typically a parent who will vouch for their children.  I’ve found that there are three types of co-signers:

  • Parents who have excellent income, credit history, and are more than willing to co-sign the lease with their children.
  • Parents who have excellent income, credit history, and are reluctant to co-sign the lease because they don’t want to be on the hook if one of the roommates destroys the place.  Often it is the persistent child who forces the parent to cave in and co-sign the lease and you get your tenant.
  • Parents who have decent income and credit history that is awful.  Unfortunately, this has happened to me more than once.  In this case, the correct move is to take a pass on the tenant.  Two tenants with bad credit history do not equal one good tenant.  Move on to the next applicant.

Its amazing that in the 21st century, I have even rented to a guy who didn’t have a checkbook.  To this guy credit cards and car payments were as complex as brain surgery is to the common man.  He had an excellent payment record with his previous long time landlord and all his utility bills were paid on time (and in person with cash).  Did I rent to him?  Absolutely.   Even though he didn’t have a co-signer, his twenty years of outstanding payment history superseded the need for a co-signer.

Does it seem like I’m contracting myself here?  I always error on the conservative side when renting to tenants with limited or bad credit.  However, don’t reject a tenant because his case is unique.

Leave a comment below.  I’ll gladly respond.

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{ 2 comments… read them below or add one }

Laura February 15, 2013 at 12:54 pm

I am trying to rent a really great house with 4 other girls. It is a 2-year lease. We are all in our early to mid 20s (most will have been out of college for at least 2 years by the time the lease starts), all have proof of steady income, and can provide excellent references. The problem we are running into is that the landlord is asking that one of our parents cosign the lease because not all of us are 25-years-old. Some of us will be 26-years-old by the time the lease is up and do not want to be “relying” on our parents any longer, nor do they want to be responsible for us. All of the parents are also extremely wary of cosigning a lease and being responsible for all 5 roommates. Is this a common situation to run into? Is there anyway to get around having a parent cosign?

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Mark February 15, 2013 at 8:20 pm

Here is an excerpt from :

http://www.nolo.com/legal-encyclopedia/free-books/renters-rights-book/chapter5-2.html

Age Discrimination

The federal Fair Housing Acts do not expressly ban discrimination based on age. Nevertheless, it is definitely forbidden under the broader prohibition against discrimination on the basis of familial status.

A landlord cannot refuse to rent to an older person or impose special terms and conditions on the tenancy unless these same standards are applied to everyone else. If you have excellent references and credit history, a landlord has no legal basis for refusing you, even if you are 85 and rely to some degree on the regular assistance of a nearby adult child or friend. (Of course, a landlord could legally give the rental to someone else with equal or better references or financial stability.) However, if your current landlord reveals that you suffer from advanced senility to the point that you often wander into the wrong apartment, frequently forget to pay the rent, or are unable to undertake basic housekeeping chores, the prospective landlord can refuse to rent to you based on this age-neutral evidence that you are not likely to be a stable, reliable tenant.

___________________________________________

Given that, it is probably not worth your time to “force” a landlord to rent to you or report him to the authorities.

However, if you applied to be a tenant in one of my properties, I would gladly rent to you on the grounds that you have excellent credit and good income. If I would rent to you, other landlords will too. Keep looking and you will find a landlord that will be happy to rent to you and your roommates.

Most landlords are looking for the added security of a parental co-signer, but that “security” may mean passing up on a good tenant(s). In my mind, this is a terrible way to run a business.

As long as your income and credit are good, you will find a landlord who will lease to you.

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