Investor · Centennial, CO · Member since 2014 · 17 posts · 3 votes
We just started marketing a rental in the Dallas area and one potential renter has offered us 12 months rent up front. We're thinking this is a no-brainer to take (assuming renter passes credit/background checks) but just curious if anyone has any experience with this or gotchas that I can't think of. If you've done this before, did you offer a discount based on up front cash and if so, how much of a discount? Our margins are slim on this one, but would be great to get 12 months all up front. Thanks all.
Investor · Forney, TX · Member since 2015 · 90 posts · 30 votes
11y
So the question I ask is why would he offer that? There has to be a reason? What reason would providing a full year of rent of front hope to overcome? That seems really suspect to me. If they has that kind of cash, why not buy? not sure this is a good deal for you.
We just started marketing a rental in the Dallas area and one potential renter has offered us 12 months rent up front. We're thinking this is a no-brainer to take (assuming renter passes credit/background checks) but just curious if anyone has any experience with this or gotchas that I can't think of. If you've done this before, did you offer a discount based on up front cash and if so, how much of a discount? Our margins are slim on this one, but would be great to get 12 months all up front. Thanks all.
Hi Jacob: I'd be very interested to hear what your due diligence reveals, and also what reasons, if any, he gave you for wanting to pay this much up-front. Hope to hear more from you about this.
Rental Property Investor · IN · Member since 2015 · 125 posts · 93 votes
11y
We were those tenants once, a very long time ago. We were living off of savings while my husband was attending grad school. We offered to pay six months up front if they lowered the rent by $50 a month for the whole time we would live there. Saved us some cash and the landlord was very happy to have the money upfront. We were the kind of tenants who left the house better than we found it. It helped our cause that her husband was the mayor of the town and a friend of ours in the town was the assistant prosecuting attorney. Maybe if you get a reference like that, it would help their cause as well. Best to you!
Santa Barbara, CA · Member since 2015 · 75 posts · 17 votes
11y
A good tenant might want to do this. For example if they work in a seasonal industry where they get their income for the year in a lump sum, they might want to pay the rent first so they do not have to worry about. Or there was the time a skunk got into the subfloor of the unit I was renting, and I was in a hurry to find another place before the skunk succeeded in digging through and emerging in the living room. Or maybe especially as more and more people are wary of handing out personal financial information, they may want to set the landlord's mind at ease by paying up front. Here is another one I encountered. A parent wanted to secure an apartment for their developmentally delayed child who worked at Goodwill. You need to evaluate the reason.
I do not think I would want to accept a 12 month prepayment if I were an absentee landlord.
In my short landlord career (about a year and a half now)- I've had prepaid rents twice already (My rentals are in a small college town in Montana). I'm happy for the guaranteed rent- but am worried about potential eviction at the end of the year if they start to not pay at that time... I'm a remote landlord- my Property Manager is required to keep the money in an "escrow" type account- I get rent payments every month just like normal...
My two prepaid rent times are from basically normal reasons:
#1 was going to school and had grants. Wanted to make sure rent was always taken care of. They left under bad circumstances. They didn't trash the place, but it was hard to get them out. BUT, I had a horrible, horrible property manager at that time that caused many of these issues...- and this was at the time of transitioning to a new property manager, so things were in flux because of the last property manager's lack of communication...
#2 received a large inheritance. They do not have a lengthy work history. They are renting now- and planning on buying a house in a year, once they are more established... As a side note, I just closed on this house about a month ago- within a week, these tenants have already planted flowers and landscaping... Pretty cool...
I think there could be many questionable scenarios as to why they want to prepay--- but potentially some good reasons also...
Investor · Bakersfield, CA · Member since 2013 · 146 posts · 93 votes
11y
This reminds me of college. After taking a class on the time value of money in college one quarter, we would always try to negotiate a 20% overall discount and upfront payment with our landlords but they never bit. We might have been shooting a little high. :)
Rental Property Investor · Providence, RI · Member since 2015 · 1k+ posts · 594 votes
11y
Lots of great responses and feedback. First thing that comes to mind is DRUG DEALER. I had this situation myself once, but the individual was extremely up front with me that he had a jail sentence and that he was paying for his wife and children's apartment.
Ask the guy flat out why he is paying so many months up front, do the necessary checks, and at the end, follow your gut. If your gut says don't, don't. If you go to bed without a know in your stomach thinking about it go for it. If not, don't create the stress.
We just started marketing a rental in the Dallas area and one potential renter has offered us 12 months rent up front. We're thinking this is a no-brainer to take (assuming renter passes credit/background checks) but just curious if anyone has any experience with this or gotchas that I can't think of. If you've done this before, did you offer a discount based on up front cash and if so, how much of a discount? Our margins are slim on this one, but would be great to get 12 months all up front. Thanks all.
Nope. Don't do it.
They'll move in and you'll have to evict. You're "no brainer" will end up to be a "head ache".
I happen to be a divorced single mother. I am a freelance writer and speaker in addition to working with vulnerable adults. I don't make tons of money but I do okay. I suffer with awful credit and an eviction due to a horrific marriage.
Contrary to most of the statements, I am not a bad person, nor am I a bad renter.
I have enough money to pay 1 years rent and security deposit up front in cash or in secured funds but I can not pass the stringent Oregon credit check terms. I also have a small circle and virtually no family. I do not want to buy because in a year I may want to move to another city.
There are obviously crappy people in the world, but people, use your brains. Don't judge everyone by their credit scores. Interview them, talk to them!!!