Tenant Short on Cash To Move In

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Tenant Short on Cash To Move In

Gary Robert Burnham Jr.
Lender · South Windsor CT · Member since 2022 · 22 posts · 6 votes

In the 12 years being a property manager of my own properties I have meet some great tenants.  I have also turned away some potentially great tenants because they simply did not have enough cash to move into my units despite 750 credit scores and ended up taking vacancy for a month.  I started asking myself why I was turning away these people simply because they didnt have enough cash to move in at the time.  So instead of turning these people away I simply work with them.  Lets say my 2 bed rents for $1500 here in West Hartford, CT.  I need a total of $18000 in the 12 months they are renting.  What I did was make the rent light in the beginning first 3 months, added more in the next 3 months......etc......This way it helped my 750 credit score tenant get the security deposit back from the previous apartment and get comfortable in the unit with my property.  Is it somewhat risky, yes....but I'll take a 750 and great person all day and bet on them then taking vacancy.  Any other ideas let me know but I found an escalating lease to work great when a great tenant is light no cash to move in.  

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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
4y
Quote from @Gary Robert Burnham Jr.:

In the 12 years being a property manager of my own properties I have meet some great tenants.  I have also turned away some potentially great tenants because they simply did not have enough cash to move into my units despite 750 credit scores and ended up taking vacancy for a month.  I started asking myself why I was turning away these people simply because they didnt have enough cash to move in at the time.  So instead of turning these people away I simply work with them.  Lets say my 2 bed rents for $1500 here in West Hartford, CT.  I need a total of $18000 in the 12 months they are renting.  What I did was make the rent light in the beginning first 3 months, added more in the next 3 months......etc......This way it helped my 750 credit score tenant get the security deposit back from the previous apartment and get comfortable in the unit with my property.  Is it somewhat risky, yes....but I'll take a 750 and great person all day and bet on them then taking vacancy.  Any other ideas let me know but I found an escalating lease to work great when a great tenant is light no cash to move in.  


 Requiring rent and deposit upfront is part of my screening process. If someone can't come up with the equivalent of two months rent, they will struggle to cover rent. If people want it bad enough, they will get credit card cash advance, borrow from relatives, etc. I have broken up security deposit in the past and it has worked out, but I probably just got lucky. 

Another option today is security deposit insurance through companies like Rhino (sayrhino.com). The tenant pays them a small monthly fee and Rhino insures them for damage. If there is damage, the landlord places a claim and Rhino pays the landlord. Many property managers offer this option. It is especially useful in states that have strict rules around security deposits. It avoid the hassle of return deadlines and interest bearing accounts, etc.

I agree that breaking up a deposit is low risk if the tenant has good credit, but I am also surprised someone with 750 credit wouldn't have the cash.

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    4y
    Quote from @Gary Robert Burnham Jr.:

    In the 12 years being a property manager of my own properties I have meet some great tenants.  I have also turned away some potentially great tenants because they simply did not have enough cash to move into my units despite 750 credit scores and ended up taking vacancy for a month.  I started asking myself why I was turning away these people simply because they didnt have enough cash to move in at the time.  So instead of turning these people away I simply work with them.  Lets say my 2 bed rents for $1500 here in West Hartford, CT.  I need a total of $18000 in the 12 months they are renting.  What I did was make the rent light in the beginning first 3 months, added more in the next 3 months......etc......This way it helped my 750 credit score tenant get the security deposit back from the previous apartment and get comfortable in the unit with my property.  Is it somewhat risky, yes....but I'll take a 750 and great person all day and bet on them then taking vacancy.  Any other ideas let me know but I found an escalating lease to work great when a great tenant is light no cash to move in.  


     Requiring rent and deposit upfront is part of my screening process. If someone can't come up with the equivalent of two months rent, they will struggle to cover rent. If people want it bad enough, they will get credit card cash advance, borrow from relatives, etc. I have broken up security deposit in the past and it has worked out, but I probably just got lucky. 

    Another option today is security deposit insurance through companies like Rhino (sayrhino.com). The tenant pays them a small monthly fee and Rhino insures them for damage. If there is damage, the landlord places a claim and Rhino pays the landlord. Many property managers offer this option. It is especially useful in states that have strict rules around security deposits. It avoid the hassle of return deadlines and interest bearing accounts, etc.

    I agree that breaking up a deposit is low risk if the tenant has good credit, but I am also surprised someone with 750 credit wouldn't have the cash.

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  • Gary Robert Burnham Jr.
    OP
    Lender · South Windsor CT · Member since 2022 · 22 posts · 6 votes
    4y

    great insight joe and thanks for that information.  

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    @Gary Robert Burnham Jr. What I'm hearing is that you value credit score most overall.....although it can be telling, it can also be misleading. Lots of morons out there with 750 scores.... Just sayin'

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  • Gary Robert Burnham Jr.
    OP
    Lender · South Windsor CT · Member since 2022 · 22 posts · 6 votes
    4y

    I’m with you.  I always meet them in person as well 

    0Reply
  • Karl B.
    Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
    4y

    I'm a C-class landlord and so I've never had someone short on cash who had a 750 credit score (I've had a few 750+ credit score tenants but they had the security deposit and 1st month's rent).

    The people who tell me they're short on rent/security deposit tell me this from the start and so I don't even get a chance to ask them what their credit score is. 

    I reckon your properties are likely A or B class. My properties are typically between $475 to $625 a month (with a few exceptions). 

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