Tenant wants to pay full year?

Question

I have had this come up before.  I just received a call from a prospective tenant wanting to see one of my SFH who said she would pay the entire year in advance.  I hate to sound cynical, but now I am wondering what kind of scam this may be?  I assume if we have to evict her we would just refund the portion of rent she did not use?  What do you all think?

Geof Greeneisen · Answer

Hi Mark  Forest I've had a number of tenants pay the entire year upfront. We do the same background checks and require cashiers checks upon move-in whether paying monthly or a full year in advance as well as the separate security deposit. With a full year in advance they shouldn't have a problem with 1 1/2 months deposit.

In the situations I had they either: had a job that required a lot of travel, or dad was paying the rent. I haven't had any issues nor did I give a discount for the advanced pay.

Michael Noto · Answer

Mark  Forest Check into why they want to pay the full year upfront.

Also let them know that even though they want to give the full year upfront you will still be running a background/credit/eviction check on them.  If they are shady at that point they will disappear.

Some of them offer the year upfront hoping the landlord will disregard other blemishes on their background.

Also make sure any payment they give you clears before you give them the keys.

Kimberly T. · Answer

We never accept checks for holding deposits, security deposits, or the first month's rent for exactly that reason - it might be a bad check.  We insist on cash, cashier's check, or money order.

As for accepting a whole year's rent up front, that usually seems suspicious to me.  As others said, they're often hoping you'll overlook some not-so-good info (past eviction, poor credit, etc.).  Also might make it hard to evict them if they violate the lease during that year (look into the legalities of that).  If you screen them and they meet all your requirements, I don't see why they couldn't still just pay the rent every month.  If they're worried about forgetting to pay sometimes, they could set up some sort of auto-pay out of a dedicated bank account they have set up just for rent.  They could either do direct deposit into your account, or have their bank automatically mail you a check every month; we've had tenants do both of those things.

Chris Winterhalter · Answer

Mark  Forest

Legalities will depend on your state.  We received a full year's worth of rent paid by the parents of someone trying to get back on their feet.  The parents wanted to ensure the son had somewhere to live (paid) for the full year.  If I remember correctly we had to hold the funds in a separate account and release each month (state was Missouri), similar to security deposits.

Even though they are paying a year in advance I would still screen the tenant like you normally do, background check, landlord references, employment verification etc.  Just because they are paying a full year's worth of rent upfront doesn't mean you can overlook criminal or eviction issues.  They might just be wealthy drug dealers :).

Marc H. · Answer

Mark  Forest I don't know anything about Michigan eviction laws, so I can't really address whether it could be a scam, but in NYC, although not common, I have heard of many people who prepay their rent in full for the year and receive a slight discount from the landlord for doing so.  In fact, a good friend of mine did this even though he didn't receive a discount because he was a trader on an exchange and his monthly cash flow fluctuated greatly.  After he had a very good month, he would just pay the rest of the years rent so that he "didn't have to worry about it."

I guess its possible that your tenant might just not want to have to think about writing a rent check each month.

Marcia Maynard · Answer

We had a tenant who paid three months at a time, as she received a benefit from a grant program that paid for her housing each college quarter. That worked out okay.

That said, there are scammers and sociopaths out there... for a thrill, watch the movie "Pacific Heights", a landlord's nightmare!

Ricardo S. · Answer

I have had that happen a few times to get a discount  then eventually I got asked the same monthly discount for a 3-4 month payment instead.

Jean Bolger · Answer

Many leases are written so that the  lease  is actually for that full  year amount, payable in twelve installments. (e.g. "rent payable in the amount of $12000, with $1000 due on the first of each month"... or something like that. ) That makes it easier for the landlord to  go after the full amount if someone breaks the lease. So it's not really that weird if you look at it that way. She may get paid sporadically and not like to budget on a monthly basis

I'd check on all  the potential issues mentioned above and if she checks out OK I'd go ahead and take her.

Nicholas Miller · Answer

I advertise "discounts with advanced pay" and I can nnormally get 3 to 6 months upfront around tax return time and with students getting ztudent loans.  I have never h@dan issue doing ththis.

Tenant wants to pay full year?

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