Tenant credit criteria
Hey gang! I was wondering, is it common to have issues finding tenants who meet your credit criteria? I'm a new landlord and it seems every candidate is lower than what my fiancee and I are looking for. Also, should I consider compensating factors? I don't want to reject EVERYBODY because their credit scores are low. We just bought our duplex a month ago and we're not in a rush to fill the vacancy because we make enough for the mortgage and bills, but at this point I'm feeling like at least a 600 seems like a lot to ask for and I just never thought it was prior to being a landlord. Advice is appreciated!
Most Popular Reply
Hi Paris, I have found that the location is the biggest factor in the type of tenants you can attract. In some areas it is hard to find high credit score tenants. It is important to understand what you get when you require a high credit score tenant: People with a high credit score generally understand how EXPENSIVE poor credit is and you can count on them to act to protect their credit score. This means that they will generally give proper notice and avoid damage to your property at least in part because they don't want you to damage their credit score.
In locations that don't attract high credit score applicants you are more likely to get tenants that will struggle financially, those that will insist that the security deposit should count as the last month's rent, or those that willl tell you to get in line if they can't pay or cause damage. You can mitigate (where the law allows it) by collecting extra security and utility deposits. You can require first AND last month's rent. You can require more 3.5x rent in income. You can set up a process that attempts to eliminate applicants that are high in entitlement, you can check references. You fix your places up extra nice to try to lure the higher score value shoppers into your property. You can treat people fairly and tenants of good character with poor financial skills will be more likely to be fair in return. We started out in "D" neighborhood world. It's hard but we made money. Now we only buy in areas that will attract high credit score tenants.