Investor/Realtor · Wentzville, MO · Member since 2014 · 846 posts · 431 votes
We have a potential renter who is offering to pay 100 dollars more per month for the 1st six months until the security deposit is paid. She is currently staying in a extended stay for $250 per week. She said she found another property to move into but it was rented out from under her. Our property is a 1/1 but has a extra room that could be used as a bedroom. She has a 17 year old daughter that will be living with her. Also she has a couple kids in college. Is this a normal offer to let a renter pay the security deposit over the first 6 months instead of all up front? We were thinking about making it nonrefundable to allow her to do that. The property is in a C class neighborhood so it is not the best quality tenants interested in renting.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
11y
I think its a huge red flag. The times I've done this I've always regretted it. There was always some excuse for why the deposit couldn't get paid. If this is really your best option, get whatever you can for a deposit and then increase the rent to give you some additional income. For instance, get $300 up front and increase the rent by $50 a month (indefinitely, not just six months.)
Investor · Fort Lauderdale, FL · Member since 2012 · 1k+ posts · 465 votes
11y
For most of my properties I require the equivalent of a 3 month rent on lease signing. First month rent, last month rent, and security deposit which is 1 month rent. There are rare occasions someone can't afford 3 months on lease signing I have allowed a payment plan.
Security deposit must be paid up front no negotiation.
I have on occasion allowed last month's rent to be paid in installments over 3 months. By the end of the third month they have paid the last month's rent as well, and that encourage them to stay the entire length of the lease.
Pike Road, AL · Member since 2014 · 11 posts · 3 votes
11y
I believe it's a huge red-colored banner. The changing times We have accomplished this We have constantly regretted this. There was constantly some justification regarding why your deposit wouldn't receive money. In case this is actually your best option, get whatever you can easily for the deposit after which it improve the book to provide some extra cash flow.
Residential Real Estate Agent · Tampa, FL · Member since 2014 · 177 posts · 122 votes
11y
there is one main reason why I differ in opinion from many posted here. It sounds great in theory to be super strict about your criteria, however, vacant properties are targets, especially in mediocre/bad neighborhoods and you call this a "C" property. I have a rental in qhat is quite frankly an F area lol and we were holding out for highly qualified applicants and in the end we had vandalism issues. Thankfully, most of it was covered by insurance but not all. So if you can be reasonably assured based on pay stubs, length of time at current job, and references from prior landlords (i don't place stock in personal references, who isn't going to give a friend a good reference) then this can be something worth considering.
In my situation, I ended up with a section 8 tenant but I had to wait for the inspection and that process. my tenant had enough money on their own for 1 months rent. I told them I would take the $1100 as security deposit and charge them a prorated daily rent fee for the first month until section 8 got in place and we would come up with a payment plan. In the end, they owe me $610 for the time they resided before section 8 kicked in. This tenant is seeking additional public assistance to pay that but has agreed to pay me $50/month extra to get caught up. Now if she struggles to do that but keeps the place in good condition, I can afford to lose this $600 as my place is being taken care of and the guaranteed nature of section 8 rent helps me tremendously.
This is the beauty and sometimes the trouble of landlording, we would love it if there were always hard and fast answers but sometimes you have to make on the spot decisions. by being picky, $1000 of damage was caused to my vacant, freshly gut renovated property. But of course, putting in the wrong tenants can also cause several 1000's of losses. Risk vs. Reward
Greenwood, IN · Member since 2013 · 346 posts · 93 votes
11y
Im a newbie landlord. But would never do this. I would rather eat the vacancy.
If they dont have the money to pay first/security before move in, huge red flag.
I understand that can be alot of money, but if they knew they were going to move, and didnt plan ahead to have the money to rent a house, how are they going to be about paying rent to you on time?
Investor · Portland, OR · Member since 2013 · 143 posts · 105 votes
11y
As a landlord, you require a security deposit for a reason. Stick to your requirements, they're there to protect you. Also, if you bend the rules for one and not the others you could open up yourself for a discrimination lawsuit.
Im a newbie landlord. But would never do this. I would rather eat the vacancy.
If they dont have the money to pay first/security before move in, huge red flag.
I understand that can be alot of money, but if they knew they were going to move, and didnt plan ahead to have the money to rent a house, how are they going to be about paying rent to you on time?
until your vacant home is vandalized and you have to spend $1200 to repair it.
Im a newbie landlord. But would never do this. I would rather eat the vacancy.
If they dont have the money to pay first/security before move in, huge red flag.
I understand that can be alot of money, but if they knew they were going to move, and didnt plan ahead to have the money to rent a house, how are they going to be about paying rent to you on time?
until your vacant home is vandalized and you have to spend $1200 to repair it.
You can put in a security system, put up window coverings (blinds, curtains) so people can't see in, put on lights on a timer ... all very inexpensive methods to make it look like someone is living there and you can reduce the risk of vacancy.
Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
11y
@David DuCille, I feel your pain about the vacancy/vandalism. We lost the copper pipes in one of our SFRs during its vacancy. In that area, it was likely the thieves had actually posed as interested tenants and scoped the place out. It was a very neat, professional pipe theft, no damage at all :)
We had light timers and window shades and a radio playing, but did not put in an alarm system until after we were hit. Lesson learned. And we'd still rather eat a vacancy than put in a red flag tenant.
Real Estate Investor · Point Pleasant Beach, NJ · Member since 2014 · 103 posts · 52 votes
9y
UPDATE: I want to take a moment to amend my comment here from almost 2 years ago. I initially wrote that it's ok to bend the rules on security deposit upfront. IT'S NOT! These tenants turned out to be nightmares and made my life miserable. They were always late with rent, always making excuses, made ENDLESS maintenance requests that were baseless, kept the apartment filthy, and overall were just awful people to have to deal with. So I want to formally change my opinion here to NO EXCEPTIONS! I've learned that some tenants can put on a real show just to get into your nice apartment, and then their true colors come out once it's too late. So no exceptions, stick to your rules to avoid problems.
Professional · San Francisco, CA · Member since 2016 · 124 posts · 31 votes
9y
I agree with others. I won’t recommend to do it. However, did you speak to her previous landlords? Maybe they will give some characteristic of that person. Thus, your decision will be more deliberate.
Investor · Katy, TX · Member since 2015 · 69 posts · 8 votes
9y
So they do have money to pay $250 a week but not $300 security deposit?
Red flag...
It is kind of priority for them to bring the deposit somehow to move in to rental rather than staying at $250 a week place.
Don't agree for installments on security deposit.
Investor/Realtor · Wentzville, MO · Member since 2014 · 846 posts · 431 votes
9y
Update on this tenant:
We passed on her because of other reasons that made her unqualified.
We settled in on a different tenant that also needed help with spreading out the deposit.
This tenant has been great.
He has been our tenant for 20 months with zero complaints. He has improved the property, is paying via direct deposit, and is a great communicator when something needs to be addressed.
In the end I am glad we went with our gut and allowed the tenant to do installments on his deposit it turned out great.
UPDATE: I want to take a moment to amend my comment here from almost 2 years ago. I initially wrote that it's ok to bend the rules on security deposit upfront. IT'S NOT! These tenants turned out to be nightmares and made my life miserable. They were always late with rent, always making excuses, made ENDLESS maintenance requests that were baseless, kept the apartment filthy, and overall were just awful people to have to deal with. So I want to formally change my opinion here to NO EXCEPTIONS! I've learned that some tenants can put on a real show just to get into your nice apartment, and then their true colors come out once it's too late. So no exceptions, stick to your rules to avoid problems.
Please go to your first post in this thread, hit the three dots at the side of that post to get some options, and then pick the "update" option; write something directing people to read your next post in page two of the thread. That update option won't allow you to write in too much, so you won't be able to tell everything like you did in the later post, so the reference is about the best way to revise about your thinking.