Happy Presidents Day! Just looking for a gut check from other landlords/property managers.
I denied an application last week because the applicant owed ~$4K to a former apartment complex. It was an active collections account and occurred within the past 5 years. The applicant seemed practically offended that I would think they couldn't pay the rent just because they owed money to a former landlord. So I replied that I had no reasonable expectation that they would pay me when they owned quite a bit of money to a former landlord. I offered to reconsider the application if they paid off their prior landlord...and the conversation went silent.
So now I'm wondering what everyone else does. Do you just look at overall credit (like score, grade, etc) or do you look at and make decision on the details?
I've been doing this long enough to know better than to ignore the red flags, but this interesting encounter just has me wondering what everyone else looks at.
You did the right thing. That applicant was an idiot to be offended over your denial of his application.
Maybe you could contact that former landlord and see if there is more to this story.
I totally agree with your approach. We do have a minimum credit score for applicants, but we also look over their report to see if there are any red flags, such as the one you mentioned about owing to a previous landlord/PM.
I would have denied the applicant for the same reason. They would not have met our minimum criteria to rent. Here's an excerpt; the full document (Rental Criteria) available in the BP File Place under Other Documents.
No outstanding debt to previous rental property owners.
No outstanding debt to utility companies.
No outstanding debt in excess of $1000 that is not in a payment plan.
No excessive monthly financial obligations - more than 20% of income.
Lack of credit history or marginal credit history may result in additional security deposit.
Derogatory credit (past due accounts, collections, charge off accounts, tax liens, judgements in excess of $1000 and/or bankruptcy) may result in additional security deposit or denial.
And when the apartment complex garnishes their wages , the next person not to get paid is the current landlord . You made the right call.
Of course that's not an acceptable tenant-you already know that. But as far as all the various formulas, scores, metrics, judgment calls, and other methods of trying to fit someone in a category goes; the ONLY thing I care about is whether I'll get paid. And in the case of landlord/tenant relations , past performance is a good indicator of future behavior. There is no other indicator that will predict behavior, in my opinion. Not always, but enough so that the risk is not worth it for me. As far as any other screening methods, you can't predict the future. I've had "perfect" candidates screw me-after all, it has to start somewhere, right? I would even take your situation another step-I'd contact the landlord with the address and contact info of the deadbeat, and hope that if you ever got stuck holding the bag, someone would do the same for you.
@Jason Mak I agree. I couldn't find an eviction, just the collections, so I'm wondering if it was for damages, or maybe they moved prior to the formal eviction. There was also a civil judgement award to someone that appeared to be a property manager when I Google'd him. I'm sure there's so much more to the story, but the only story I got was 'I was young and stupid'. We actually signed the lease with someone else on Saturday.
@Matt Sicignano I actually told the applicant past performance is an indicator of future performance. I didn't expect them to bite on paying the former landlord, but if they did, I would have been happy for the landlord. I use a scoring system but it boils down to having a reasonable expectation that I'll collect the rent. That's my gauge when screening.
@Marcia Maynard Great list of factors. I read recently that you should deny more applicants than you approve. That's certainly been my track record over the past week.
@Matthew Paul Hadn't thought of that. And they were barely meeting our minimum 3x rent requirement for income!
@Kimberly T. I got an applicant's credit report back yesterday and the score was over 550. I did a two-step in the middle of the living room floor. My family thought I was nuts! Unfortunately I don't think she's going to take the unit. And with the other one leased on Saturday, this is our last vacancy.
@Ursula B. Owing money for past housing is an automatic dis-qualifier for me! I've had a few applicants act offended/surprised that I didn't want to rent to them with 500 credit scores, past eviction etc. I'm always :O
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