Tenant with a co-signer. Not sure what to do!

14 Replies

Hey guys - I'm on my first investment property (duplex) and am finally getting my first tenant in the open side. The other side had an inherited tenant.

This applicant is a college student that has just started a job as a cook at a local restaurant. He's been there less than 2 weeks. He does not meet the income requirement but everything else looks good. He is going to get his mom to co-sign for him, but she will not be living there.

Being a new landlord, I am not sure how to handle this. I know I should make sure his co-signer pass the same standards as he does. Assuming she does, I want to move forward with this applicant.

So my questions are:

1. Does the co-signer get added to the lease just like a second tenant...Or do I need to get a new lease that has language specifically regarding 'co-signer'?

2. Is a co-signer any different than a second resident tenant?

3. Is there a good resource you can point me to to read further about how this works?  Site search isn't turning up much.

I'm really excited about getting this tenant as I have been trying to get one for about 3 months now without luck. Finally I have one that looks promising so I want to make sure I do this correctly! Not to mention, I want to be perceived as knowing what I'm doing even if I really dont :)

Any advice is appreciated. 

I believe you have a bigger problem than deciding whether or not to accept a co-signer. It shouldn’t take 3 months to get a place rented. I suspect either the unit is priced too high, the unit’s quality doesn’t match the competition in the area, or a mixture of both. Most investors would pass over this applicant and move on to the next one. You should have a stack of applications by now.

I would check your local tenant laws but if they sign on the lease they would have tenant rights. In California the tenant would sign the lease and the co-signer/guarantor would sign a separate document stating they are the co-signer/guarantor. Another thing to check is to see if the mother makes enough money. In California I have seen tenants needing to make 3x the rent and guarantors needing to make 5x the rent.

Since I rent to so many students I have parents co sign all the time. They sign as a guaranteer of the lease payments. I get a credit check and income verification for them but they do not sign the lease as a tenant. I have a separate form for them to sign as co signers.

I'm new at investing, and not yet doing rentals, but I might suggest meeting a few other Apartment property managers around your area, and see what they do and use. Then take that info to any attorney, to see if it needs and fine tuning for your specific needs.

Obviously you are desperate for a tenant otherwise it is a given that my advice would be to pass on this applicant. It is always going to turn out bad when a landlord tries to make a unqualified applicant work.

If you take him you must, without a doubt, only offer a M2M lease. When it goes sideways you want to be able to clear him out quickly and move on.

Thanks everyone... not sure why you guys are hating on student renters so much though.  I was a student once and I needed a co signer so I can relate.  It's just been so long ago that I can't remember how it worked.

@Marcy Moyer is your co signer form pretty simple or is it like a separate lease?  I found a co-signer form on nolo.com and it was only a 1 page document.

It is only one page. I can email it to you if you message me with your email. I don't have  hard rule for income needed. I base it more on credit score and how much it would hurt the co signer is the leasee does not pay. 

@Marcy Moyer Thats awesome.  I would really appreciate that.  I just sent you an email to the address in your signature.  Thanks!

I have a rental that is currently empty and has been formano T 3 months. It’s a combination of the time it was made available, the requirements I have and the applicants I get at the time of the year it was made available. 

People will tell you about returns or losses etc. I rather have a property empty than to rent to a substandard tenant. Been there done that. I tried the let me see how I can make this tenant fit so I can accept them. Each time i did that in the end it created headaches for me. So I stopped. I don’t care how nice they are or what they promise. 

If the applocant doesn’t have the income credit and the background cleared I simply say pass thank you. Especially in California. I have had tenants who were as long as 20 plus years  and as short as one to two years in residency. I only do month to month leases. I guarantee a no rent raise for 14 months. But if the tenant ends up being a dirt bag I’m not suffering through a year of crap. We part ways fast enough. 

As for co-signers I don’t accept them.  It’s amost impossible to get money out of them and even if you win in court good luck. 

You need (IMO) to get a clear and direct acceptance policy. Credit x score, income x amount, still x percent, background x type. Anyone who doesn’t meet requirements gets declined.  

I had to co-sign for my daughter twice when she was in college and I had moved out of state.  Both times, I requested that I be on the lease as well so that I had the right to enter.  Otherwise, the co-signer is responsible for the payment but doesn't have the right to enter the property.   So you may want to ask the co-signer if they'd rather be on the lease as a tenant or if they just want to guarantee the payment.   

If their a student this is pretty common. I had this when I was In college even though I paid my own rent from savings mostly. (I typically didn’t have a steady income).

If the parents come back clean I don’t see why it’s an issue

I, too, am in a similar situation. I have two possibilities for renters for one of my units. One, the guy has a good job, though he just started this job a week ago, but makes over 3x rent amount, and his girlfriend has no income. The other couple, she makes no income(student), and he only makes $1100/mo, (rent is $825). She says her mom will be paying her $675/mo for rent and for schooling. He says his mom could co-sign, and has a very lucrative job. So, I guess my question is, if I even consider the couple, with mom to co-sign, should she fill out the application and go through the credit/background check as well? Or since I have the other first candidates with good income, should I just decline the second applicants altogether and not deal with a co-signer? Any advice greatly appreciated! TIA.

I inherited a tenant a while back with a cosigner. First month after we took over he was late and we could not contact for one or days. So we called the cosigner and educated them on their responsibilities nicely but firmly. It has now been over a year and rent has arrived on time every month. The tenant is an older gent; his brother is the co signer.

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