Can I rent home to someone with bad credit

Question

I just got a new investment property, there is this potential tenant, single parent with four kids, the eldest daughter is 24 yrs old, the tenant was upfront about a rocky credit, but when I ran the application the credit was 420 with student and car loan, there is a bunch of default payment ranging from kohls to rent default from two years back, although the background check came in clean with no eviction history, I used Cozy app for screening this time, the lady says her eldest daughter has a good credit score and between both their incomes they should be able to meet the income minimum, a part of me wants to help here but I am new to this so not sure if its a bad mistake to let my emotions take over

I was planning of using some precautions like getting two months deposit, doing a month on month lease, having both applicants in lease contract... what else am I missing, or should I just stay from this.. appreciate your advice

I was planning of using some precautions like  getting two months deposit, doing a month on month lease, having both applicants in lease contract... what else am I missing, or should I just stay from this.. appreciate your advice

Cornelius Garland · Answer

@Mushtaq G. I'm no expert in landlording, but I do know that mixing emotions and business is never good. I've seen several people make this mistake when renting out a property, and the situation never ended well. I can tell you how it'll play out if you go forward with this. They'll move in and be so grateful. They'll pay on time for about 3 months, but something will "suddenly" come up the fourth month. It'll probably be related to health so you'll let them pay the rent later or allow them to double up on payments the next month. Then this cycle will repeat itself until you're fed up and you need to evict them. What's more of a red flag is that they said they "should be able to meet the income minimum". This means that they can't pay you, or they'll either prioritize their other bills in front of paying rent since they know you're a nice guy. They'll take advantage of you because they know they can pay rent late, but they can't get away with paying their car bill, water bill, etc late.

This one is easy. Just don't do it. Like the gentleman above me said, you're not running a charity. It's a privilege to live in a home, whether renting or paying a mortgage, so they need to meet the standards to earn this privilege.

Thomas S. · Answer

You need to set some strict screening standards and stick to them. You are operating a business not a charity.

Tell the part of you that wants to help them to stay home before you are forced into bankruptcy by a tenant with a 420 score, she is practically a criminal.

Dan K. · Answer

As others have said, do not do it.

@Jeff Rabinowitz --- Renting to people who are through a bankruptcy is not a bad idea, especially after a Chapter 7. All of their debts (besides student loans and taxes) will be gone. Furthermore, they can't file for bankruptcy for a number of years.

@Mustaq G. --- As others have said don't do it.

Besides mixing emotions with business you are opening yourself up for discrimination. If the same person had no kids would you rent to them? How about if it was a man with that credit score looking for to rent? People have guid lines and criteria to ensure that they are fair.

Final thought --- If the daughter can qualify on her own, you could rent to the daughter. Mom could help the daughter with rent and daughter can be the primary tenant.

Scott Weaner · Answer

@Mushtaq G.

DONOTDOIT!

Mushtaq G. · Answer

do I have to return the application fee, I think she paid 39$

Mushtaq G. · Answer

@Jeff Rabinowitz good question @Thomas S... agree with both of you, I'll drop this case

Jeff Rabinowitz · Answer

I have rented to tenants who were fresh out of bankruptcy, they had poor credit scores. They were up front about the bankruptcy, had strong current income, were collectible, and their credit report showed they were taking steps to change their situation (paying off old debts). They were thankful I was willing to give them a chance and were good tenants. They did not, however, have any history of rent defaults. That would have disqualified them. Tell me, since this potential tenant has a history of rent defaults which have not been addressed, why do you think they will treat you better than their previous landlord? The credit score is not that important. I don't even pull the FICO score. It is important to evaluate current income in relation to current debts and to check to see if they are collectible (do they have a long employment history and a job they would be very reluctant to leave even if they had to move?).

Can I rent home to someone with bad credit

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