Would you rent to unemployed couple with 6 months prepaid rent???

44 Replies

Looking to rent one of my 2 bedroom units and a couple with an interesting situation applied and I wanted to see what some you of thought of renting to them.  

The husband was recently laid off from his job and is currently seeking employment.  The wife is currently staying home with their young child.   They recently sold their home and have offered to prepay the first 6 months of rent (1650 per month) and begin paying on first month and continue for the next 6 months until the full years rent is paid.   They stated that they have very little debt and sizable savings (getting the credit reports this evening).  He filed for bankruptcy 5 years ago and she has good credit.

What do you guys think?   

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Nope. If they were willing to pay six months' total rent up front, I'd write them a six-month lease & put the money in escrow, taking out each month as it came along.

If you don't have the cash in your hand right now, you may never get it. Don't risk it.

there are more reasons not to do it than to do it.  that being said, I did it.  He was on unemployment, he was up front about it, he had good savings, his wife worked.   He is my best renter.  He just got laid off, but he found another job.

I probably wouldn't do it again though.

You guys are confirming my initial reaction to the request.

If they are willing to prepay 6 months they might be willing to prepay a full year.  If so, then just sign them up for a 1-year lease.

The whole BK 5 years ago is not a good sign. Perhaps he met her and she straightened him out. That shows a poor record of money management.

The only question would be how employable is he? Why is he unemployed? Large layoff or something about him?

Lots of unanswered questions and any one of them turns out bad you've wasted a lot of time screening. In my market today, I would not have to consider them.

@Bill  I think you are correct in your statement that he met her and she straightened him out.  He was a manager at a restaurant that recently closed down.  

I think I am going to counter their 6-month offer with either a 6-month or  1-year prepaid lease.  

Seems like the best situation to protect myself.

I did something similar last year. I rented to a divorced woman with no job. She did have a 800 credit score and enough cash in the bank to pay rent for 30 months (if she had no other expenses). She paid six months. When the six months was up, she paid another six months. 

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Originally posted by @Michael Hoover:

@Bill  I think you are correct in your statement that he met her and she straightened him out.  He was a manager at a restaurant that recently closed down.  

I think I am going to counter their 6-month offer with either a 6-month or  1-year prepaid lease.  

Seems like the best situation to protect myself.

Even if you do this.. what happens at the end of the 6 month or 12 month period if he is still not working? They will have NO income. Hard to pay rent with NO income.

How long does an eviction take in your state and what does it cost?

I am not seeing the same risks that some of you are suggesting if I get a full year of rent ahead of time.  I could put in a clause that states if they wish to renew for another year the rent must be fully paid again for at least 6 months in advance.  

Illinois is very tenant friendly state and Chicago takes it to a whole new level but if you stay on top of rules I don't think it should be that much of an issue.

Is Notice Required if a Lease Expires?

A written lease expires automatically when the lease says it does, usually after one year. However, if the Chicago Residential Landlord and Tenant Ordinance (RLTO) applies to your rental unit, you must give the tenant notice, in writing, 30 days before the end of the lease, that you will not renew the lease. If you do not, the tenant can stay an additional 60 days past the expiration of the lease. After 60 days, you can file an eviction lawsuit, without giving a 5, 10, or 30-day notice.

Rent Payments After Expired Lease

If you accept rent after the end of the lease, you will create a new month-to-month lease with your tenant. This new tenancy will have the same rules and terms as the lease you were using. If you want to end the lease at some point in the future, you will have to give a 30-Day Notice as described above.

Are you saying you have 6 months rent and they will pay rent each month 1-6 and THEN apply the held monies for rent months 6-12?  If I liked the people I'd do it for Karma. 

Originally posted by @Bob Bowling:

Are you saying you have 6 months rent and they will pay rent each month 1-6 and THEN apply the held monies for rent months 6-12?  If I liked the people I'd do it for Karma. 

 Exactly what you said....

Thats the real question you need to answer to determine whether to do it or not.

What county is this property in because the length of an eviction is really going to determine how big a risk this actually is.

Your tagline says you're from Chicago, IL. Does that mean this house is in Cook County? If so, then absolutely do not do it. Cook county evictions take between 4 to 5 months and a really sharp tenant can get it stretched out even further.

$1,650 is a pretty sizable number too.  

If the property is in one of the collar counties where it only takes a month or two, then I think its worth the risk. They might have a BK, but as long as they have no evictions, then they'll probably be ok.  But what are they going to do if he doesn't get a job in 6 months? 

Unemployment doesn't pay that much and the chicagoland area is not exactly booming with jobs these days. Well, it is in some fields and isn't in others. Whats his job history look like? I'd take that into consideration as well.

Originally posted by @Mike H.:

Thats the real question you need to answer to determine whether to do it or not.

What county is this property in because the length of an eviction is really going to determine how big a risk this actually is.

Your tagline says you're from Chicago, IL. Does that mean this house is in Cook County? If so, then absolutely do not do it. Cook county evictions take between 4 to 5 months and a really sharp tenant can get it stretched out even further.

The property is located in Cook County and yes the eviction process can be lengthy here.

Would a 12 month prepaid lease change your viewpoint?   

I am waiting until this evening to make my final determination after I receiving both credit reports but as of right now I do not think it is worth the risk.  

If I ran my business with personal emotions or if it was someone I truly was indebted to I would. 

Seeing I now realize this is my business and i plan to run it as such.

NO NO NO and I'm speaking as someone who does invest in Chicago's Cook County.

What happens in 12 months if he still has no job and savings is low...do you think any landlord would take them at that point?  No they'd squat on your property because they'd have no other choice.  So you would have 12 months fully paid and 4-5 months unpaid + eviction costs.  Only thing I can think of is if you can use security deposits there to offset eviction costs...then maybe collect the most you lawfully can in security deposit AND collect your 12 months prepaid.

As a fellow landlord in Cook County I too would stay away from this type of agreement.  

One of my biggest questions to you - is are you having trouble finding a tenant for your place?

My experience is that the rental market is still strong - so why not look for the best possible tenant?

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Matthew Putnick

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