Rental applicant with recent business Chap 7 – yes/no?

Rental applicant with recent business Chap 7 – yes/no?

Investor · Portland, OR · Member since 2017 · 12 posts · 3 votes

I’d like your opinions on an applicant for a house I rent. The applicants had a restaurant that was vastly popular (per reviews and local news write-ups – yes I checked them. Also many youtube videos of their business), but could not make it work and had to file Chap 7 bankruptcy. They closed the doors in October 2016 and it was discharged with a Final Decree dated April 21st 2017. Per applicant they got into a bad lease (a news article also said this ) for a building that needed costly upgrades and maintenance, for which they were responsible, that sucked them dry. Since they closed the doors the husband has a new job and she has started with Starbucks in a management track program. Current income is sufficient at about 3x the rent. Both employment verifications were glowing… “go getters”,”long term prospects”, “very good hire” and so on. Prior to the restaurant they had long-term steady employment. Reason for moving… relocating to be closer to work and family. Want to stay at least 3 years for son to finish High School at one place. 10 year rental history… haven’t talked with landlord yet… have message in. They have been very up front and organized in their dealings with me.  In fact they brought up the Chapter 7 even realizing it may not yet show on any credit checks. They have retirement savings (public utility pension), but can't touch that.  They have savings to cover rent and security and other deposits (gave me their bank statements with last 6 month.  They have offered to prepay first 3 months rent.
 

So what do you think about renting to them? Is there anything on the Chapter 7 I should check on in particular?

Thanks!!

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  • Investor · Portland, OR · Member since 2017 · 12 posts · 3 votes
    9y

    All right BP community... any thoughts?  Have gotten a good reference from current landlord who bought the house with the tenants in it 4 years ago.  They kept up with the payments during the bankruptcy.  Verified through PACE that the bankruptcy was discharged (not dismissed).

  • Chris MasonPro Member
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    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y

    Hi @Kerry Malarkey,

    If the applicant had a new freshly started business they were setting up, I'd be inclined towards no, not with that track record of self employment. 

    But as gainfully employed W2 folks, I'd lean towards sure why not. No one Starbucks manager can BK Starbucks, and there's no reason to assume that less than perfect business owner track record would translate to bad Starbucks shift manager where most of the decisions are probably made via some corporate flow chart anyways. :)

  • Investor · Portland, OR · Member since 2017 · 12 posts · 3 votes
    9y

    thanks Chris Mason.  They actually both have W-2 jobs.  He has a salary + commission sales job and has done well.  She is just starting in the Starbucks management training program and her salary is more for future potential.  Starbucks locations are all company stores managed by w-2 employees.

    Right now I'm having a hard time figuring out what to look at regarding the BK.  I'm on PACE and have looked at a 'Case Summary'  that shows the BK was discharged.  What I'd like to see is some sense of what the debt's were that were discharged.  Any knowledge on what report/document would get me this?  There are several listed but the titles are not real informative about the contents and since I'm charged for each one I pull I'd rather pull only ones I need!

    Thanks!

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