Renter offering 12 months up front

61 Replies

Are they offering you a cashiers check originating from a Bank outside the US?  If so it is most likely a scam.

International  cashiers checks take 3 weeks to clear. Scammers have been known to write a large cashier's check for a rental on a long term lease. About a week later they call the unsuspecting landlord and say their transfer got canceled or some excuse like that therefore they cannot go through with the lease. But they only ask for a little of the total money back, like one or two thousand dollars. You check your bank account and see that the cashiers check has posted so you write them a check for $2000. About two weeks later you get a call from your bank saying the cashiers check they credited you with came back bogus therefore it didn't actually clear even though it showed up as a credit to your account. The scammer walks with your $2000 scot-free.

I think probing on why he's going this route is the best suggestion.  Don't be afraid to ask him uncomfortable questions but also be transparent with him letting him know that this is not common so you need to know why he's going this route.  I hope it all works out for you.

12 months prepaid rent sounds tempting! I recommending proceeding with caution. I recently completed a City required Crime Free housing course for a Buy and Hold.  This is an approach Gypsies use to get around the background checks.  Once they receive keys they will move 12 people into a 2 bedroom apartment.  It is  difficult to verify occupancy fraud .  They will claim they are visiting family and raise hell for the neighbors.  

Good Luck!   

Originally posted by @Rob Beland :

@Mindy Jensen if the tenant prepays but breaks some other term of the lease like smoking or causing damage is the landlord still bound to this tenant? Is that a CO law? 

 There are many reasons why a lease can be broken by a landlord. Most standard lease forms have a clause that states causing damage is a lease breaker and if you put a no-smoking clause into your leases, that can be a valid, legal one as well. Other clauses you may want to consider are ones concerning pets, roommates, and illegal drug use. I always attach a Lease Addendum which includes my personal criteria as well as highlighting certain key clauses in the lease, as tenants seldom bother to read the whole thing.

Originally posted by @Jacob Stark :

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.

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!

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. 

@Jacob Stark ,

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...

Anyway, my 2.5 cents- adjusted for inflation...

Jimmy

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. :)

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.

Originally posted by @Jacob Stark :

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".

The assumption of bad people is overwhelming. 

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!!! 

Let's try treating people humanely.