I'm working to fill a new SFR I just bought. Application I'm processing right now is a couple who currently live separately, represent themselves as being engaged, and have a baby together. One has excellent income with a good employer, excellent landlord reference, no criminal or court records, all good stuff. The other, self employed, no criminal or court records, but has not paid rent last month or this month. This person has been in their current apartment a year and a half, and other than the current delinquent rent, was given an ok rating by the current landlord.
With just the documented income from the first applicant they more than meet my income criteria. If the LL reference for the second applicant was decent I was going to pull credit and as long as there weren't any significant judgments outstanding that didn't show in court records, offer them the house.
I'm inclined to offer them the house with double deposit, as my criteria allow increased deposit to compensate for outstanding judgments or poor/lack of rental history.
So, I'm looking for how you handle a situation where you have one good one not so good applicant. Feedback appreciated!
Unmarried couple has issues and mom moves in with her parents. Guy who had rent problems now lives alone and you are now dealing with someone with recent bad rent, a mad fiancee(ex fiancee) and a possible future payment for child support...if you think that's a remote possibility after meeting them then you know what I would choose.
I only have a duplex and don't have much experience, but when i have a case where i'm not too sure on offering the unit, i ask for first and last month's rent plus the deposit..when everything checks out, it's just the month up front and deposit..
i'm sure in your case you'll be fine, since you mentioned the one applicant more than meets your income requirement..but protecting yourself as you mentioned doesn't seem unfair to me.
Joshua, your logic is sound. I believe the likely scenario if they break up is that the one with income and solid reference would the be one to stay. If either of them leave I'm confident I've got at least one tenant who could be garnished.
Urial, you are essentially suggesting I collect the same amount of money at move in I was considering--first months rent, standard security deposit of one month, plus doubling the security deposit. I encourage you to not collect last months rent and instead just double the security deposit. The rationale is that they are giving you the same amount of money to move in either way, but if things do go bad, the last month of the tenancy you still have the ability to file for eviction if they don't pay rent, therefore giving you some leverage and allowing you to hold more of their funds for repairs, if necessary.
I had a similar situation recently, and I had my lease written up such that the "quality" tenant was responsible for the full lease amount regardless of what the other tenant was able to pay. He was responsible for getting the other portion of the rent from the other tenant himself. It worked out fine.
However, not paying rent is a pretty big red flag in my opinion. If there is an explanation for the unpaid rent such as a recent layoff, that might be more understandable. I think you are justified in requesting an explanation.
Keep in mind that the "ok" rating from the previous landlord could really be, "This might turn out ok for you, but it sure didn't for me. Please just take him so I don't have to deal with him."
Paul, I use the standard Wisconsin lease with states all tenants are responsible for the full amount of rent.
The landlord giving the poor reference is one of the larger professional management firms in town, and they stated that they are preparing to evict this guy. They aren't hiding anything!
Since you are in a state that apparently doesn't limit security deposits, it might be worth the risk if they are willing to pay the higher deposit, but I would make sure they understand what jointly and severally liable means and stress that you do not tolerate late rent payments. Personally, the only way it would work for me is if the one with the late rents was a legal dependent of the first, like a spouse; otherwise, I make both of them qualify as you never know which one is going to leave if they break up.
My they could be bill gates if they haven't paid rent at their last place for the past month or two I don't want them ;)
Keep looking you will find a solid tenant that fits your criteria!
There seem to be a lot more couples where the money problems of one drag down the other than the reverse situation. Even if it means take a longer vacancy and a little less rent, you will find tenants where both pay their rent.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!