Plano, TX · Member since 2016 · 37 posts · 5 votes
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
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.
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.
Plano, TX · Member since 2016 · 37 posts · 5 votes
9y
:).. I didnt realize this will be emotionally draining experience, not even wait till her daughter finishes her application, perhaps her credit score is better
Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
9y
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?).
Richmond, TX · Member since 2017 · 16 posts · 0 votes
9y
I only have two properties but I have a screening criteria to help keep emotions out of the process. Be sure to speak with pass landlords and employer to help you decide. Concrete evidence to back up your end result (this part is black and white for me)not stories everyone has a story but it's business not personal don't take the risk if you feel unsure. Good Luck
Wholesaler · Charlotte, NC · Member since 2015 · 398 posts · 680 votes
9y
@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.
Investor · Shakopee, MN · Member since 2017 · 102 posts · 60 votes
9y
I could understand some student loan or even medical that--that can really trash your credit score even if you're otherwise responsible. But the rent defaults and the Kohl's credit card are the biggest red flags to me.
I agree with all the other comments about, if she defaulted on rent before, then there is no reason to believe things would be any different now--especially because of how recently it happened. And charges on a Kohl's credit card couldn't possibly be essentials--like someone who had to charge groceries/utilities on their credit card during a slump, but couldn't pay it back. Department store shopping is never necessary.
Also I would definitely defer to the experienced investors on this forum, but my understanding of application fees is that they're usually nonrefundable -- like those are fees for you to pull the necessary reports. I've heard property managers/landlords mention that they specifically specify the application fee is nonrefundable, so if you haven't been doing that, maybe it would be good to do going forward?
Good luck finding a tenant!
Rental Property Investor · Boston, MA · Member since 2012 · 257 posts · 139 votes
9y
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.