I just bought my first rental property in November (a duplex), and am currently trying to rent one of the units in it.
I have had one nice young lady that was very interested in renting the apartment, but she did not meet the income requirement (3x rent). She has asked if she can have her mother cosign on the lease so that she can rent the apartment. Thus far she is the only prospective tenant to give me a completed application.
Assuming she meets my other criteria (no evictions, no felonies) should I allow her to rent the unit with her mother as the cosigner? And if so, should I screen the mother?
i dont see why not however i would also be basing on her mothers income. I would want to know what they both make, and i would put both their names on the lease.
Some landlords who accept cosigners have specific requirements of those cosigners (own real estate in the state, live locally, minimum income, etc.) so that they are easier to find and sue if needed, so if you decide to accept them, do some research on how to properly screen the cosigner.
Personally, we do not accept cosigners. Too often, the tenant ends up having no incentive (or at least less incentive) to maintain the unit, pay rent on time, etc., because they think their cosigner will cover it (because the cosigner is typically the parent). I don't want a tenant who hasn't established that they are an independent, responsible adult, or who wants more home than they can afford. Someone who doesn't have enough income is likely going to: a) be late with rent multiple times, b) trash the unit because mom paid the security deposit so there's no incentive to get it back, or c) both. This is obviously just my opinion and some cosigner situations do work out, but to me, the risks outweigh the benefits.
I have accepted co-signors and it never worked out well. Sometimes sitting on the vacancy costs less in the long run than placing a poor tenant in the apartment and later having to bounce them out. I have had some "very nice" people stick me for a lot of money because, when things go bad for them, they won't feel any remorse when they can't pay the rent.
With that said, I have looked at some applications and considered various factors when looking at income. If they don't have a car payment, for example, or walk to work and don't need a car, then you may look at adjusting income requirements slightly.
Definitely screen the guarantor and verify their income. We require the guarantor to demonstrate monthly income 5 times the rent. They should also have excellent credit. Then you can be assured they will pay rather than risk jeopardizing their credit score, should that become necessary.
This formula has worked well for us.
We deal with this a lot at the properties I manage. Things to consider: 1. How close is she to 3x the rent? 2. Absolutely screen the co-signor. You need to know what his/her financial and rental history is too. 3. Increase the security deposit.
If the prospect is nowhere near making the monthly rent, a co-signor is not going to fix that unless the co-signor is going to also help pay the rent.
Thanks for all the input. I'm still taking applications on the unit, so I'm hoping to get one that can make the rent WITHOUT a co-signer.
@Greg Brown - how did this end up working out?
I ended up finding a better tenant that did not need a cosigner to guarantee the rent. Thanks for the follow up!
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