Will you rent to this tenant?

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Will you rent to this tenant?

Jacob Beg
Woodbridge, VA · Member since 2017 · 122 posts · 44 votes

Hi All- The tenant was evicted in 2018, she says she fell I’ll buy repaid the arrears. I will be confirm that. 

For past three years, she is staying with relatives. He credit score is marginal. 

She has social sec income of 2200 per month and VA disability income of 5100 per month.

Willing to pay one years rent up front. Monthly rent is 1950 per month. 

My rent is about 200 higher than the market but it’s been updated/rehabbed. 

Any thoughts? 

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Wesley W.
Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
4y

I stopped reading at "tenant was evicted in 2018" - there a number of (poor) decisions that a tenant has to make in order to actually be evicted.  The fact that they did not take advantage of the numerous safety nets / assistance programs available, or failed to make not very desirable but necessary changes to their lifestyle in order to avoid receiving a service (housing) without paying for it.  This tells me all I need to know about their character.  Sure there are exceptions, but the exceptions prove the rule.  I'll let someone else "take a chance" on them.  Life is too short.  Hard pass.

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  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    4y

    @Jacob Beg that is a firm 'Hell No'! Not a chance in any of my properties!

    10Reply
  • Kevin BakerPro Member
    Real Estate Agent · Spring Hill, FL · Member since 2016 · 2 posts · 7 votes
    4y

    @Jacob Beg as a 20 year (and counting) servicemember, I would check the VA disability amount. Unless there are many dependants, I have never heard of anyone making that much on disability before. https://www.va.gov/disability/... I have heard people taking larger deposits for marginal credit and poor rental history but not a full year upfront. Just monitor monthly payment history/habits. Be fair and offer the same terms to everyone in this position so there is equal treatment. Everyone makes mistakes and I am for giving people second chances as long as there is a clear understanding upfront.

    6Reply
  • Jeremy Horton
    Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    Is there anyone else available?

    If her history is any indication of future performance (it usually is) you are just finding out the problems you will be having to deal with ahead of time. 

    I would pass. She has been staying with family members since her eviction...that tells you all you need to know right there. 

    7Reply
  • Wesley W.
    Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
    4y

    I stopped reading at "tenant was evicted in 2018" - there a number of (poor) decisions that a tenant has to make in order to actually be evicted.  The fact that they did not take advantage of the numerous safety nets / assistance programs available, or failed to make not very desirable but necessary changes to their lifestyle in order to avoid receiving a service (housing) without paying for it.  This tells me all I need to know about their character.  Sure there are exceptions, but the exceptions prove the rule.  I'll let someone else "take a chance" on them.  Life is too short.  Hard pass.

    11Reply
  • Jason Andler
    Canton OH · Member since 2019 · 41 posts · 39 votes
    4y

    @Jacob Beg

    You need to write down your acceptance criteria. The first line of my criteria is no prior evictions. I would not (and could not) accept this tenant regardless of what excuse/reason they give. I also don't need to spend my time debating if I should accept a special case.

    "Sorry, company policy is no evictions and making an exception for you may violate fair housing laws."

    5Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    4y

    How were they evicted 4 years ago making $7,000/mo?  Sure sounds like bad life choices. 

    They should have $100,000 in saved rent piled up in a savings account, I’d suggest they buy a property if they really think they have their life back together. 

    3Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y

    I agree with Bill.  If she's making $7K a month and been living with relatives for the last 3 years, she's had plenty of time to get her credit score up.

    1Reply
  • Galen Ikonomov
    Member since 2021 · 256 posts · 213 votes
    4y

    Stopped reading at "was evicted".

    I don't care what excuses come front. Hard NO. Pay your freaking bills man...

    2Reply
  • Jacob Beg
    OP
    Woodbridge, VA · Member since 2017 · 122 posts · 44 votes
    4y

    Thank you all for the quality input. 

    @Kevin Baker appreciate the referral to the calculator. I have yet to look at her benefit statement since she is apparently receiving 130% of the benefit which appear to be some sort of special payment in excess of the regular or usual benefit. 

    I rented to someone about three years ago, his bankruptcy was two years old but he paid up a year’s worth of rent up front and it’s been going good so far.

    This is always a tough call because I do make individual choices as I manage my own portfolio etc. My real concern is what if she loses her disability benefit or a portion of it, that’s majority of her income. 

    I couldn’t find eviction on her records, she volunteered that information. For me, that was indicative of being honest. I’ve had many prospects who lie or just hope nothing comes up including a guy claiming to make 200k a year from self employment, but when asked for two months security deposit he wondered if we accept section 8 vouchers because his wife receives benefits. 

    I haven’t had many inquiries for this property and the year up front does sound enticing. If this sits for another month, I would need to start thinking about selling while the Tale end of the summer is still here. 

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Jacob Beg:

    Set some standards and stick to them.

    I'm a retired veteran. I don't know anyone making $5,100 a month from disability, particularly someone old enough to collect social security. She was evicted but paid everything in arrears? Now she has $24,000 saved up to pay a year in advance?

    So many red flags that I wouldn't even return her call. NEXT!

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    3Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    4y

    @Jacob Beg,

    First, very that she repaid the arrears that got her evicted.

    Second, verify her income. Bank statements, etc.

    Third, credit score has some meaning, but remember: scores get no one approved, but they can get you declined. It's a gatekeeper, not a trophy. The actual credit report content is what you want to see. Bankruptcies and late payments can drag scores down for years.

    If you are still considering her as a tenant after all that, arrange to have her deposit the rent-in-advance in an escrow account. The escrow company can disburse to you monthly

    My $0.02 ...

    3Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y

    Sure, put them on a month to month lease 

    2Reply
  • Matthew Bowling
    New to Real Estate · Worcester, MA · Member since 2021 · 63 posts · 48 votes
    4y

    Wow, these are some fantastic comments! I just read BP's book on Managing Rental Properties and Jacob's post reads red flag after red flag. If it were one of my rentals, then I would decline to rent to this individual based on not meeting my qualification standards. 

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    No freaking way! So many Red Flags here.....And never take a years rent in advance, that is just another red flag. She is lying about almost everything, I would bet....

    PS to all - I do have a friend who is receiving a large sum from the VA monthly for life so I know it is possible. It took him 15 years of appeals to get it. But he gets the 100% kind of money. You don't want that kind of money.

    2Reply
  • Josh Oaten
    Investor · Phoenix, AZ · Member since 2017 · 261 posts · 143 votes
    4y
    Quote from @Jacob Beg:

    Hi All- The tenant was evicted in 2018, she says she fell I’ll buy repaid the arrears. I will be confirm that. 

    For past three years, she is staying with relatives. He credit score is marginal. 

    She has social sec income of 2200 per month and VA disability income of 5100 per month.

    Willing to pay one years rent up front. Monthly rent is 1950 per month. 

    My rent is about 200 higher than the market but it’s been updated/rehabbed. 

    Any thoughts? 

    Jacob,

    It depends on your rental criteria and who you have and haven’t accepted in the past. You have to be consistent with this process or you will have issues.

    As an example, a criteria may consist of:
    Applicant must
    - Make 3X rent rate in terms of gross income, verifiable through their 3 most recent pay stubs, most recent tax returns, award letter or employment letter (on company letter head)
    - 6 months positive verifiable rental history
    - Evictions in the past 5 years are automatic denial
    - You set a credit score they must be above
    - You set your criminal record tolerance. 

    In this case from the information provided, the applicant would not qualify based on income, credit or rental history.

    Hope this helps.
    1Reply
  • Josh Oaten
    Investor · Phoenix, AZ · Member since 2017 · 261 posts · 143 votes
    4y
    Quote from @Eliott Elias:

    Sure, put them on a month to month lease 

    Eliott,

    Even if renting month to month and there are issues, you will still have the same legal head ache and costs of removing the tenant if there were on a 12 month lease. You would probably end up paying more in legal, turn costs and remarketing than you would to have it vacant another month and wait for a better tenant. 

    1Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    4y

    Class C renter -- maybe depending on strength or lack of strength of other applicants at the time (due to public money vs earned income).

    if so 1st, last, and security + days of month left in this month (not a years money in a pile and then she has to start paying--bad training--that end of year payment might not be there).

    If she messes it up, 5 day notice, late fees,etc...up to filing eviction (and a turn) if needed.

    My guess is irresponsible focus on monthly bills, but if the $$$ is there 12 late fees add up to some extra cash flow from that unit.

    But definitely not the top of line renter--but sometimes you have to settle vs. losing 4 months of rent to a vacant unit waiting.

    But it depends on how you want to run your business--there are only 12 months (52 weeks a year to extract cash from that unit).

    And it depends on [IF] you can afford to take a risk with that units cash flow--or if you MUST have a stronger renter.

    But if stronger candidates are available, why take the risk.

    The year in advance is probably a convenience for her to not have to focus on bills vs. a gift for you...meaning she probably knows it's her weak spot--and that will probably bite you if you rent to her.

    Just my 2 cents.

    1Reply
  • Tim JacobPro Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 520 posts · 379 votes
    4y

    Probably an easy no however one question is where is the property.  Also how long does it take to evict someone in that jurisdiction.  Also would lowering the price get more applicants.  I would rather take someone at a lesser rent than someone that is such a huge risk.  If this is D grade and you lowered things enough and evictions are 3 or 4 months then maybe.  Anything higher and I would say no.   I dont work in D grade anymore and dont want to manage anymore C grade stuff for others.  I only own B grade and recommend that or higher to investors to give you an idea of my tolerance from doing this awhile.  

    2Reply
  • Jeff CopelandBusiness Member
    Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
    4y

    Hard no for me. And there are actually major risks to accepting a year of rent in advance:

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  • Chad Hale
    Property Manager / Investor · San Jose, CA · Member since 2013 · 780 posts · 302 votes
    4y

    @Jacob Beg  Any eviction at any time is an immediate No, with no exceptions ever.

    It is hard to get an eviction on your record with many opportunities to avoid that.  If you were successful in achieving that, just wow, next.

    Again NO,  same as just about everyone else who has replied.

    2Reply
  • Jacob Beg
    OP
    Woodbridge, VA · Member since 2017 · 122 posts · 44 votes
    4y

    I have been looking up garnishment rules and it appears that neither the social security benefits nor the VA benefits are "garnishable" by creditors such as landlords seeking to collect past due rent.

    Effectively, these benefits are beyond the reach of creditors. While many states prohibit discrimination based upon “source of income”, meaning one may not decline section 8, social security or Va benefit recipients solely due to the source of payment, this is an interesting read nevertheless. 

    In my case, my attention is focused on the eviction and extremely poor credit and now that I’ve examined the credit history I am leaning towards refusing the enticing offer of a year’s worth rent up front and decline the app. 

    In areas like FL or other locations where there is a large portion of renters are reviewing SS benefits, or where the primary source of income is SS, how are others dealing with issue of enforcement of rent if there is a rent arrear? 



    2Reply
  • Adam Martin
    Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
    4y

    Prepaid rent sounds nice but it is not to be confused as a safety net.  Larger deposits if your area allows it mitigates risk, prepaid rent just kicks the risk down the road.  This one is a double no for me, I need to see no evictions plus you have to have verifiable rent payments, either or is a disqualifier.  

    1Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    I would never rent to anyone who had an eviction. Pre-paid rent only lasts for so long, she can just refuse to leave at the end. Unless you are in a horrible area you should have lots of better applicants. 

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Jacob Beg:

    I am leaning towards refusing the enticing offer of a year’s worth rent up front and decline the app. 

    You need to stop thinking of a year's rent up front as anything good or enticing. What if this person had excellent credit and no eviction and offered you rent in advance? Still enticing? NO.


    1Reply
  • Debra Cheney
    Los Angeles, CA · Member since 2015 · 8 posts · 2 votes
    4y
    Quote from @Bill B.:

    How were they evicted 4 years ago making $7,000/mo?  Sure sounds like bad life choices. 

    They should have $100,000 in saved rent piled up in a savings account, I’d suggest they buy a property if they really think they have their life back together.

    Yes, Bill. Good suggestion for this applicant. The applicant is a veteran and can get VA-loans for housing. Example: a condo in Henderson, NV?

    1Reply
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