What's YOUR experience and opinion?

Question

I have a young unmarried couple with average credit, no evictions, easily able to afford the rent of my house. AND I have three young women who are interested in splitting the rent with average or little credit. In either case,if one person leaves, the remaining tenant(s) would find it hard to make the rent payment. How do I determine the best risk?

Kelly N. · Answer

I've rented to unmarried couples and groups of friends, I think I'd take the friends over the unmarried couple UNLESS the couple had already lived together somewhere else, but for the most part neither has been a problem for me.  I've had two couples break up and in both cases it wasn't a big deal- one found a subletter to help cover the rent for the least few months of the lease, the other had qualified with just the boyfriend and the other roommate, then the girlfriend moved in, so it went back to the original arrangement when they broke up and she moved out.

Do have something in place in your lease stating what happens if someone wants to move out, you'll need to cover the rent, security deposit, and that all remaining roommates need to sign off on a replacement tenant and that the new tenant would have to pass the background check as well.

Marcia Maynard · Answer

To determine the best risk, first set your rental criteria, then screen each adult by having each person complete a rental application. You need to look at more than just credit and eviction history.

1. Rental history.

2. Income/Employment history.

3. Credit history.

4. Legal/Criminal history.

Make sure your rental agreement names all adult occupants as tenants "jointly and severally liable". Frequent turnovers are costly. Did you ask the prospective renters how long they plan to stay in the place they will be renting? That weighs big in my book. Younger tenants often think one year is a long time. We look for tenants who want to settle down and stay a much longer period of time. Most of our tenants rent from us for more than 5 years. We have quite a few past the 10 yr and 15 yr marks, and two past 20 yr mark.

Whether you rent to an unmarried couple or three independent people, you need to establish your operating procedures to protect your risk. You will do best by collecting rent as one rent check. Have them designate a key contact person for the household. Talk with them about the affordability of not only the rent, but also the utilities and typical living expenses.

Establish a procedure for when tenants want to change the make-up of the household, as it can happen at any time, even with couples who have been married for many years. You can not really know what they can afford in the future, whether they stay together as a group or not. Circumstances change and earning power can change too.

Also, consider their critical thinking skills and personality. Did they complete the application? Do they follow directions? Do they ask the kind of questions that indicate they understand what it takes to have a successful tenancy? Are they cooperative? Are they respectful? How well do they present themselves? Maturity does not always come with age, so age is relative.  Some young adults can be quite successful as tenants, even those without an established credit history or rental history. You want to focus in on what they have going for them that will make them good tenants.

Lastly, to cover your risk, collect a sufficient security deposit at the start of tenancy and don't use it for anything until after the tenant moves out.  If a tenant has weakness in their rental history, credit history, work history, or legal history, then consider approving them with conditions... such as a higher security deposit. By all means, establish clear expectations from the start and have a solid rental agreement. And remember to  abide by the fair housing laws and  non-discrimination laws for your jurisdiction.

Daria B. · Answer

The couple could split and leave you with one person.

The 3 other individuals could also split and leave you with one or two.

In either case, the person(s) remaining are responsible for the rent, as per your agreement as it should be.

With all things being equal on the credit and background checks, etc, you said the unmarried couple could easily afford the rent where the other 3 candidates would find it hard.

I would go with the couple.

Alexander Schaaf · Answer

Hi Sherry,

It seems tough for you to estimate which renters are likely to stay, but It sounds like you're sure both could afford it. I would think about having them sign a lease and charge a fee for breaking the lease, that way each renter has to suffer a financial consequence if they break the lease terms, just a thought.

Good luck!

James DeRoest · Answer

I'd go with the young married couple any day over groups of friends.

The problem with house sharing is that you end up being the counseling service when they all fall out, and they will, without doubt fall out with each other. And then they will think they can leave you hanging with 2/3rds of the rent because one left and "why should I pay their portion" blah blah blah.

Not to mention the whole "can you throw person three out because we've fallen out with each other" and that drama.

Seriously, as a seasoned landlord, go with the married couple.

I'll be very honest, even if the choice was a group of friends, or marketing it longer to find the right people, I'd go with the latter. Groups of friends and unmarried couples who are moving in together for the first time are tenants that we stay away from.