Houston, TX · Member since 2017 · 49 posts · 15 votes
A 20 year old college student is wanting to rent my cottage for 6 months because she graduates this year and is planning on moving out of state. Her grandfather will be paying me the full amount up front. She is currently living in an apartment complexes and her grandfather was paying all of her rent there too. The apartment lease is now up so she needs a place to stay for 6 months until she graduates.
Assuming her current t apartment gives her a good recommendation, and she seems like a good person and clears backround credit check.
Absolutely do not accept the money. If you do you will need to keep it in a separate account and only draw out the money each month when the rent is due. The money remains the property of the tenant until the rent is due each month. Your tenant may also demand the remaining money back at any point in time.
Our business operates by the month, no reason to change.
I can only speak for Texas. You do not need to keep in a separate account and there is no statute requiring a landlord to return rent if asked for. If the tenant vacated early, the rent and deposit would be returned minus all deductions within 30 days of move out and providing a forwarding address which is no different from any other payment arrangement
Would I do this deal? Depends on how easy it would be to rent the property again in the Dec/Jan timeframe which is typically slower most other times of the year
The apartment doesn't do 6 month leases. She said she tried to renew but the require at least a 12 month lease. She gave me all their info and her info so I can call and verify her story
Me = hell yes. Do it
Most people = no
Hope that helps.
(I just rented to someone "questionable". Paid up till October. Manager goes to the property yesterday as she got a call that cops were there. He was busted and hauled off. Felony warrants.
Good thing I have 3 extra months of rent.
I'm always cautious about people who want to pay up front. Personally, I'd prefer a monthly payment. A six month lease puts you trying to get a new tenant in January/February of next year. I don't know Texas, but in my neck of the woods, that's a bad time to be looking for a renter. The best times are in the summer, as they tend to have more people looking (shorter vacancy periods) and tend to demand higher rents during this time.
I also prefer tenants with the potential to stay multiple years since there are expenses around marketing a vacancy and fixing up the house after they move out.
With all that said, personally I would not do this deal.
Absolutely do not accept the money. If you do you will need to keep it in a separate account and only draw out the money each month when the rent is due. The money remains the property of the tenant until the rent is due each month. Your tenant may also demand the remaining money back at any point in time.
Our business operates by the month, no reason to change.
@Lee V. I have dealt with this similar situation when I was leasing out apartments for my previous company out here in California. I'm not sure how Texas works as well but these would be some questions that I would
I think in this scenario there are a few things that should be considered:
What is the likeliness of your home being rented out in 6 months?
What is the current renters' market like?
What is your tolerance/limit for how long a unit might sit vacant? I think this is important if you own only this one unit or have several units in your portfolio.
Anyways, regardless if she's trying to lease for 6 months or 6 years I would still make sure that I perform my due diligence on her background and rental history, which it sounds like you already plan on doing.
Additionally I would consider different exit strategies to this lease. For example, what if your renter decides that she wants to exit the lease early? Is there a penalty for lease break? What happens to the rent? Is it treated as a credit thus refunded after the difference (penalty) is taken off? Again the answers to these questions may differ as my previous experiences were with California renters.
The only reason you don't want to rent to her (assuming she is qualified) is in 6-mo you have to do this all over again. Normally short term lease demands more rent, so you can charge her 15-20% over your normal rate. This way after 6-mo, you have some extra cushion. If she agrees, there's very little down side. But make sure you still charge her security deposit, just in case she becomes a squatter after 6-mo. And in your lease, clearly itemize the monthly rent and deposit, because in some states (eg CA), you can't hold more then 2 month of rent as deposit.
Absolutely do not accept the money. If you do you will need to keep it in a separate account and only draw out the money each month when the rent is due. The money remains the property of the tenant until the rent is due each month. Your tenant may also demand the remaining money back at any point in time.
Our business operates by the month, no reason to change.
I can only speak for Texas. You do not need to keep in a separate account and there is no statute requiring a landlord to return rent if asked for. If the tenant vacated early, the rent and deposit would be returned minus all deductions within 30 days of move out and providing a forwarding address which is no different from any other payment arrangement
Would I do this deal? Depends on how easy it would be to rent the property again in the Dec/Jan timeframe which is typically slower most other times of the year
Mike V. This is a tricky one. I had an almost identical situation with a med school tenant who had bad credit so offered to pay 6 months up front and then another 6 months when his next set of housing allowance came thru.
Even with that, he was a bit of a nightmare...was late with the next 6 mos payment and then only had 3 mos rather than the 6 agreed. Always chasing him down.
Have you met her? What is your gut feeling? If her credit is solid and you know you can rent the place in 6 mos, you will likely be ok. You may also consider charging a bit more per mos to offset the shorter lease. Good luck with it!
@Lee V. In Texas, this is about as it gets for a six month lease. A year paid in advance would be better. If you want you could have a lawyer draft a lease that removes all mentions of monthly payments in the lease. Simply make it where ALL of the rent is do in advance and the term of the lease is six months.
Nothing legally wrong with taking it up front. Different people have different needs. I know plenty of grandparents who prefer writing one check (don't like online auto debit, etc.) and wants to make sure it goes to rent and not beer money.
I agree with @Ronald Rohde assessment of the situation as to why her rent would get paid upfront by the grandparent. A student living off of help from a grandparent is a different story than an adult who wants to pay rent up front with no explanation. I tend to advise against upfront payments because they seem suspicious as to why someone would have that much liquid income all at once. But this seems legitimate if she passes your tenant screening checks.
How a one time payment benefits you? Are you investing the money paid up-front? Whats the revenue of that up-front rent? If not, don't do it. If that person turns out to be a delinquent, then you are stuck the full time he/she pre-paid you... so in other words, DON'T DO IT, its all about risks and consequences... I see it as a medium risk, HIGH consequence, and that puts you in the red zone...