Involved In Real Estate · Brooklyn, NY · Member since 2014 · 5 posts · 0 votes
12y
I usually do annual income at 40x annual rent and 700+ credit score. They are about $12K short. See if you can get 2-3 months in additional security. Also, security deposit should equal 1 months rent.
Investor · Saint Paul, MN · Member since 2014 · 18 posts · 10 votes
12y
Westin: this may be a little bit of unsolicited advice but, it's a good idea to sit down and write a policy manual for how you're going to manage your properties. Then, follow everything in the manual. If you ever need to make a decision just do what your manual says. You will always have the policies to blame when someone says you're treating them unfairly and you'll rarely have a decision to make. If you'd like, I'd be happy to send mine for your adaptation. Or, just go and pick any book on land lording and follow that advice. Treat your investments like a business!
Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
12y
@Dean Meier Any chance you would be willing to share your policy manual with me too? I've been meaning to put things in writing, and I would love to have a jumping off point.
I usually do annual income at 40x annual rent and 700+ credit score. They are about $12K short. See if you can get 2-3 months in additional security. Also, security deposit should equal 1 months rent.
I believe Jermel meant to say "annual income >= Monthly Rent * 40" That being said 30 times is what I see a lot here in NYC.
@Dean Meier Any chance you would be willing to share your policy manual with me too? I've been meaning to put things in writing, and I would love to have a jumping off point.
Dean, if you are ameniable, you could upload it to FilePlace here at BP for member access.
@Dean Meier Any chance you would be willing to share your policy manual with me too? I've been meaning to put things in writing, and I would love to have a jumping off point.
Dean, if you are ameniable, you could upload it to FilePlace here at BP for member access.
Sorry, but that sounds ridiculous. Maybe you meant to write that you require annual income to be 40x MONTHLY rent. That is not too far from monthly income required to be 3x monthly rent; for that case annual income would be 36x monthly rent.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
12y
Clearly no need to beat a dead horse and you have already made the informed and intelligent decision to deny, however, for all readers, the lesson here is two fold.
1. Prospective tenants should make at least 3 times what the rent rate is in gross income. Cheating here slightly is OK with larger deposits, additional collateral, or cosigners.
2. You should put in place (BEFORE starting out as a landlord) rules, regulations, protocols, etc that you and if applicable, your property manager follows and stick to them. Feeling sorry for someone, getting excited or rushed, or having any emotion at all has no place in tenant screening, this is a business not a charity and not following good guidelines you should have set in place in advance is recipe for loss of income.
Wow, I'm flattered you would want them. Give me a couple days and I'll tidy them up a bit. If I'm going to post them for the world to see, they'd better represent me well.
Real Estate Consultant · Brighton, MI · Member since 2013 · 607 posts · 251 votes
12y
Their income is too low. Earning approx $2000 per month after tax (20% tax) plus the $355 from CS only brings in $2355. Wife is taxed on CS payments. You should go for those who earn a minimum of three times the rent which in this case is approx $3525. They will struggle to make consistent payments especially is a crisis comes up (one of them ends up in hospital or loses job and has to suddenly take care of elderly parents). Take a pass.
Investor and Real Estate Agent · Maize, KS · Member since 2014 · 270 posts · 53 votes
12y
Here's the update :
4 showings today ; 3 duds and 1 in consideration :
Here's the positives : 5-6 times rent income ; paid 2 months up front tonight plus deposit ($3400 total) ; solid jobs -- nothing bush league like before ; showed urgency of making sure I was a landlord that would fix things quickly when issues arrise
Negatives : Both smokers ; not husband and wife (Bf/Gf) and a little odd / quirky couple. (Saying quickly is being friendly. Other occupants would be the ladies 20 year old daughter who was very nice and her 7 month baby. Lady is moving out of her ex husbands house
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
12y
Only thoughts are, income good, smoking not an issue so long as your lease is very specific that smoking inside the home is strictly prohibited and failure to comply will result in immediate termination of lease and loss of entire security deposit for cleaning expenses.
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
12y
@Westin Hudnall Not really enough here to fully evaluate. However, we would not rent to them because of the smoking. This is clearly stated in our rental criteria and in our advertising.
Smoking is a deal breaker for us. We don't rent to smokers. Smokers are not a protected class. We never had a smoker who didn't end up smoking inside the unit at some point. We don't allow smoking anywhere on the premises.
We just had to rehab a unit where the tenant allowed unauthorized occupants to move in and those people smoked in the unit. The damage occurs so quickly. We had to replace all floor coverings (all rooms had cigarette burns and permeated smoke odor into the carpet and pad, had to clean-seal-repaint all walls and ceilings, deep clean all cabinetry and every surface in the unit. There was also damage from cigarette burns on window sills and the fireplace mantle. Plus smoking is a fire hazard and health hazard. Every time we have redone a two bedroom unit because of smoking, it has cost us a minimum of $2,000. Something to consider when you are drafting your list of rental criteria.
Investor · Saint Paul, MN · Member since 2014 · 18 posts · 10 votes
12y
I would get a background check on all residents 18+ years of age. If the daughter has little to no rental or credit history then run a criminal background only and charge the tenant a bit less. It's not too late for you to start implementing some policies right now. Get an app, send the app to background, call previous landlords, verify income. Make sure they don't sell crack on the side.
As far as smoking goes, are you really going to take on the expense of kicking them out and re-renting the place because they smoked inside? Put in your lease that smoking is prohibited and the next time you're at the house, take a picture of the dirty ashtray or one of them smoking in the house. Then, without starting a confrontation, let them know they're not supposed to smoke in the house. They know already, this is to CYOA. Then, if they ever move out ( my tenants never do 8^) ) charge them to fumigate and repaint the ceilings. If they stay =long enough to really smoke up the place, you'll have made a lot of money off of them. That is as long as they aren't Cheech and Chonging all day. Then you may have to charge them to clean up twice.
Just my two cents. Worth what you just paid for it I suppose.
Maybe I am a bit conservative, but I am not sure selling land to buy a new car for cash shows wisdom in handling one's finances. On the one hand, it's awesome it's paid for. But a brand new Dodge Durango? Eh, I'm probably being too tough on the guy.
Real Estate Agent · Phoenix, AZ · Member since 2012 · 640 posts · 457 votes
12y
I don't see as many red flags as other posters.
They are pretty close to the 3x monthly rent in gross income
Owning both cars free and clear eliminates what likely would have been their 2nd and 3rd largest monthly expenses after rent (more free cash flow each month).
I don't know about landscaping in that part of Kansas, but here in Phoenix there's nothing seasonal about it. Landscapers are always in high demand and able to work 365 days a year.
I would definitely pull full credit/background report on both husband and wife. Look for any red flags (delinquent accounts, bankruptcies, evictions etc) I would also ask for 3 most recent monthly bank statements to verify his income and review their other expenses and spending habits. Finally, I would ask for the maximum allowable security deposit to make up for their income shortage.