Is it worth running credit check on subsidized tenants?

Question

Rather, is it worth running a credit check on applicants who are subsidized?

Hello, have a senior couple in their early 60's who receive subsidized rent and are interested in my available lower unit.

The program is not Section 8, but uses the same criteria for inspections. A case manager who assists them in securing housing.

Living in the property next door, I've gotten to know them and their 2 very well trained and obedient dogs. The guy is forever working on the lawn or yard. Their landlord will be selling the property. They don't want to have to leave the street. And they'd prefer to have less steps to climb, as they currently live in the Up unit.

They've watched me fixing up the house, which I got a few weeks ago. For reference sake, the neighborhood would rate about a C+ or B-.

I read the criteria to be eligible for the rent subsidy. You have to be very poor and/or have medical ailments, which they do, to get it.

They can come up with the security deposit and extra security deposits for each dog.

My question to the community is -

Should I even make them pay an additional $60 for background checks when it's already evident they have no credit or bad credit?

Any other tips on engaging with a case manager would be appreciated as well.

Thanks!

Filipe Pereira · Answer

@Brad Nelson I always do credit checks because sometimes an eviction might not show up on their background check, but if there is a debt or collection from an apartment complex, then that certainly tells me something. This has actually happened before...tenant's background search came clear, but s/he owed several thousands to one of their old landlords. Upon further research the tenant had to pay a judgement. AKA not the kind of tenant I want!

Kelly Byrd · Answer

Think about would you do with the results of a credit check. If it comes out below 700, what would you do? What about 600? 500? If your answer is the same regardless, doing the credit check may be a waste of time of and money.

Brad Nelson · Answer

No, I wouldn't be inheriting them as it's a separate property. The house I bought is vacant and m prepping it to be rented for the 1st of the month. The couple in question just happen to be renting the upstairs of the house next door. They'd be moving out of that property to my available downstairs unit.

To restate my question -

Is it an undue hardship to ask subsidized applicants to pay for a credit check, when it's a given that their credit is most likely lousy due to medical bills, etc..?

Benjamin Aaker · Answer

Just think about why anyone runs the credit check: You want to know whether they will pay the rent. Obviously the credit check won't tell you this, so you need to get as much information together and make a case by case decision.

Since you are considering purchasing the property, I recommend getting the information from the landlord. The landlord may have already done a credit check on them. You might request this as a contingency in your purchase offer. You definitely should request the rent roll. BP has a forum for multifamily and I'd suggest looking there for tips. I'm just starting in multifamily but it would be strange for me to suddenly ask all the inherited tenants to do a credit check. The checking should be done on the due diligence end when you are negotiating with the seller.

Good luck!

Is it worth running credit check on subsidized tenants?

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