Which tenant would you pick? - 2nd time

Question

Which tenant would you pick?

#1. Grandfather, his brother, 2 young grand daughters, 4 great grand kids. Has section 8 VA voucher. Mostly on fixed incomes. Fallen on hard time & has 1 eviction record after their landlord raised rent, but that was before they have the section 8 voucher. One young daughter (the mother of 4 kids) might has some run in with the law. They have a VA social worker who will visit monthly to make sure they keep their end of the rental contract.

Plus: They live in their last rental for more than 15 years. If I let them in, they probably stay forever.

Minus: Eviction record

#2. 2 couples with no kids. They have low end jobs, but their combined income is about 2.9x to 3.1x rent. They currently live in mid to low end apartment, and plan to rent the house together (same rent price as 2 small apartment, but they have much more room / space & better area). One of them used to own a house, and lost it in 2012 during the real estate bust.

Plus: 4 incomes

Minus: Short sale / foreclose record. They probably will stay for about 3, 4 years. Might split up before that. Asked for some concession.

Linval T. · Answer

@Albert Ng - These tenants seem to be marginal picks. They might be good people, but, spell trouble as potential renters in my estimation.

My theory is that I prefer to have the place empty than rush to admit marginal tenants and risk having a massive headache to get rid of them.

I would stay away from both of them and keep looking. If the rent is competitive with the neighborhood rate and the place is attractive, you will get it rented to tenants with better financials and resumes.

Good luck.

Albert Ng · Answer

Thanks Minh. Giving that they are 2 couples with no kid, and there are 5 bedroom. Is there anyway practical way I can limit / prevent them from sub-leasing?

Account Closed · Answer

Albert,

I think you meant 1st month, last month plus deposit. If you're going to do that, I would consider lower the deposit to about 1/2month worth of rent so the tenant will be all in at 2.5 months worth of rent.

Given the two choices, I'd go with the two couples with no kids. I like the fact that one couple used to own a house. This couple knows how to take better care of your rental IMO. I have two tenants that lost their homes to foreclosure and short sale during this mortgage meltdown. Both have been great tenants. They take really good care of the properties. Both have been in my rentals for 5 and 6 years. From that perspective, I think I'm biased. :0)

Good luck.

Colleen F. · Answer

If this is it, rent might be too high. Don't negotiate down for this couple. If you are going to lower the rent-  advertise lower rent and consider all the new prospects. My thought on those who ask you to lower is that they can't afford it now so what makes you think they will be able to afford it later.  Of course there are other reasons that people negotiate but I don't see  that here.

On the washer dryer is it usually included in your area?  If so then I would have them, might get you more prospects.

On the first prospects I don't know the social programs so a lot depends on the reliability of the program, the reference of the last landlord, and the legal issues of the daughter. To be evicted after 15 years there has to be more info there..

I just want to comment that you should not consider how long people say they are going to stay. They do what they do and they will tell you what they think you want to hear.

Albert Ng · Answer

UPDATE:

I offered the house to group # 2, which counter and ask for a $200 off per month, plus ask for washer / dryer.

I dug deeper about group #1, and they are on HUD-VASH program. The month counselling visit is from HUD-VASH. Any feedback on HUD-VASH program?

Albert Ng · Answer

Not bad, but I have left it open for 1 month, so kind of feel some pressure to fill it.

Stephen E. · Answer

I don't think either of these tenant prospects are very appealing. Evictions on the one hand but you hope social services will keep them on the straight and narrow path. From what I have heard from other landlords, social services interest may well evaporate once these tenants have a signed lease. Then there are two couples, all of whom have to work in order to make just about 3x rent but maybe more if your reading of pay stubs is correct (which it may not be - they could have overtime or one time payments in there - tax returns are always best). As someone pointed out earlier, groups such as this often separate and then you could be left with as little as 1.5x rent.

How badly do you need next month's rent? Enough to take on either of these risky prospects?

Albert Ng · Answer

It has been empty for 1 month. I got some selections last month, but decided to pass. Maybe my rent is a bit too high.

Albert Ng · Answer

@Ben Dunavent, @Anna Buffkin, @Linval T

This is a 5 bed / 3 bath house, thus the higher number of people.

I'm a bit tilling toward #2. Their credit score is about 680. I digged a bit deeper & calculate their combine income last year, based on W2 & tax return is about 3.7x  of rent. Base on their pay stubs, this year income is about 4x of rent. I plan to offer the house to them with a 1 month rent security deposit, plus 1 more month security for last month rent. What do you guy think?

Ben Dunavent · Answer

I would be concerned with that many people living in the rental. I would imagine that you would have to worry about damage. What kind of security deposits are you looking at? As for the 2nd option I would say that is iffy at best. I would agree with Anna is there a 3rd option? How long has it been sitting without an tenant?

Which tenant would you pick? - 2nd time

Most Popular Reply