I am a newbie investor and seeking advice on placing a tenant in our first investment property.
I have a potential tenant who is willing to pay rent for the month of November despite the fact that he will also have to pay rent at his current apartment because he really doesn't want to lose the new place. He tells me he cannot pay the damage deposit too, however, until December 1st. The background and credit check and reference from previous landlord checks out. I am considering leasing him the place with the contingency that he must pay December rent and the damage deposit on December 1st or else he will need to leave (evict). Basically he's asking for a month to provide the damage deposit. Thoughts?
I never let anyone move in without paying the security deposit and first month's rent in full. Once he moves in, there is no incentive to pay you and you really don't want to have to deal with an eviction.
Keep looking for a tenant and if the place is still available when he comes up with all the money, then you can rent to him.
We have a very strict - no keys until security deposit and first month's rent has been received.
Did you go back further than the current landlord for a reference? Did you check with employers to confirm he earns 3x rent (or more)? Did the applicant provide bank statements? If he has been planning this move, I would think he'd have his quarters rolled.
If is he well vetted, then go ahead and accept him, but try the following:
If it is legal in your area, I would be more inclined to have him pay a "holding fee" for November (it may be the amount of rent, or less, your call) and have the lease start December 01 ... and not give him keys, nor allow him to move any items into the unit, until you have the deposit and first month's rent.
@Dan Timmons since this is your first property please take a moment to read this quick article Tenant Screening: Ultimate Guide
I typically never rent without security deposit and full first months rent no matter what the story. You are running a business and ideally want to minimize/eliminate stress..Tenant screening is extremely crucial so make sure you take everything into consideration.
Anyways good luck
Do not allow the person into the property and give them keys without getting the security deposit and first month's rent.
A "Holding off the market" agreement is one way to go but I would only use it if no other qualified tenant is found. The holding agreement usually is paid for with a non-refundable fee with the security deposit. In either case, you would not make as much money as you would if had a qualified tenant for the same period. Do not give out the keys until you have the first month's rent with security deposit.
Thank you all for your timely and helpful responses. It's sometimes challenging to balance the desire to help others with managing real estate as a business. These are great reminders that this is a business and decisions need to be made accordingly. Thank you again!
Pass, money upfront or move on, non negotiable
I recently had a tenant that could not move in until next pay period. He paid me the one month deposit to hold the unit along with app fee. we signed an agreement that simply stated if i disqualified him based on the background screening, he gets his deposit back. If he changes his mind and does not want the unit, or can't move in on the agreed upon date, then he forfeits the full deposit and i rent to someone else.
It worked for me and I did not mind holding the property for 2 weeks until he could pay me the first full months rent with certified funds.
I recently did something similar to @Chris Simmons
I took first months rent and 50% security deposit and pet fee. We signed an agreement stating when next payment was due for security deposit. I turned over the keys and let them move in a couple days before the 1st (on a weekend). They paid the remainder on the 1st as agreed. I would normally not do this, but this tenant had phenomenal credit and income. Plus, I knew where he worked and when he got paid. So, it was low risk.
As I am going through my first tenant eviction, as such I would suggest you pass. Learned my lesson and I am paying my tuition too.
I am the Alpha male, Bad A$$ Marine Drill Sargent from here forward. Don't even bend a rule, never. I would not even do it for my own mother now.
This question is really a personal decision of risk. Best case scenario he moves in and pays it, worst case he doesn't and you have to evict him. Is having a tenant today worth the possibility of having to evict the guy next month if he can't come up with the deposit? Take a look into your states eviction rules to see how much of a headache the guy could potentially cause you and decide if the risk is worth it.
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