Tenant has been approved but can't pay deposit and rent for two weeks

Real Estate Investor · Bentonville, AR · Member since 2013 · 3 posts · 0 votes

Three young people, ( a couple engaged and a single male) were approved yesterday for move in but say they cannot pay the deposit for a week or the rent until two weeks.

Should I rescind the approval and keep showing the house?

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Ricardo S.

Investor · Charlotte, NC · Member since 2014 · 117 posts · 32 votes

11y

I wouldnt trust them

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Stan Butler
Investor · Roswell, GA · Member since 2008 · 231 posts · 104 votes
11y
That's a very strange combination of tenants. Why would a newly engaged couple want a "roomate"? Actually, maybe I don't want to know.
Are they asking you to let them move in before they get you the money?? or are they asking you to just to hold the property for them until they get funds??
My policy is always the first money in my hand gets the property. So I would communicate to them that they have been approved but that you cannot hold the property for them. Its a major red flag to me when people cannot come up with the money needed to secure the property. That usually means I will have trouble collecting rent from them during their period of residency.
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Steve Olafson
Scottsdale, AZ · Member since 2014 · 659 posts · 536 votes
11y
Let them know that the place is not locked up until they pay you the holding deposit. That deposit is non-refundable. The approval can remain in place but you should keep the residence on the market for now.
We allow a place to be held for 2 weeks. We will also allow longer periods of holding for a fee. The future resident does not need to pay rent until the date of the lease signing/move-in by our process.
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William Geren
OP
Real Estate Investor · Bentonville, AR · Member since 2013 · 3 posts · 0 votes
11y
Thank you.
That was my gut feeling also.
Have a lot to learn.
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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
11y
What's your market like? I will hold a unit for a week or so, with a non-refundable deposit. Longer if its currently occupied. But I ONLY hold if approved applicants pay a non-refundable holding deposit. No money, and the most they will get is the right of first refusal. I'll continue to market until someone signs and lease and hands over the full deposit plus one full months rent in cash or money order. If they're approved and aren't ready to pay and I find someone else who is ready, I'll offer the first applicant the option to move in at the same date as the second applicant. If not, the second one gets it.
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William Geren
OP
Real Estate Investor · Bentonville, AR · Member since 2013 · 3 posts · 0 votes
11y
Our market is pretty hot.
I have a $ 200 holding deposit from them but it was meant to hold the deposit only until they were approved, signed lease and made all nec. payments.
I like your approach.
Thanks
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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
11y
My holding deposit is equal to the security deposit. If they sign a lease on the agreed-upon date, it becomes the security deposit. If not, I keep it and resume marketing the property. I have a form that says "non-refundable" multiple times in big letters.
Lease signing and exchange of cash and keys all happens at once. If the unit was vacant, and given the 1st of Jan is a Thursday, I'd be willing to do all this on Saturday Dec 27 or so and give them the end of Dec for free. I probably would not hold a unit from now until the end of the month. But given that Christmas is coming up, I might. Other months, I would not because I'm confident I could get someone sooner. But our market is very hot and the vacancy rate is VERY low.
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Aly W.
Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
11y
We just held a condo for a month, tenants are moving in on Monday. The market in So. FL has plenty of options for tenants. These were very strong applicants, and they signed everything and paid last month. Their current lease doesn't end until 12/15. Usually we don't need to hold a property this long, but since it took 10 days for the condo board to approve them, it was really less than a month holding. And we had already rejected 3 other applicants. It depends on the market and the timing.
But any tenant that says they *can't* pay, that's a red flag for sure, especially with 3 adults.
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Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
11y
Yeah the 200 holding deposit is really low.
You haven't signed anything yet that would obligate you to renting to them correct??
When you say approved them what are your screening standards for income and credit?? Did you screen all three or just the first two??
Sounds like from what they are saying they are living hand to mouth and were barely able to scrape up the 200. Did you go more than one landlord back or place of residence for references??
Seems like they are almost pre-defaulting before they move in by giving excuses today.
You should have a system where potential tenants understand until ALL obligations are met for move in and money received that you have a " right to continued marketing " on the property.
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Ricardo S.
Investor · Charlotte, NC · Member since 2014 · 117 posts · 32 votes
11y
I wouldnt trust them
2 Reply
Bryan N.
Investor · Hampton Roads, VA · Member since 2014 · 1k+ posts · 418 votes
11y
Return the money and move on... Drama is in your future if you "entertain" them.
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