Would you rent to this tenant?

15 Replies

My leasing agent thinks the applicant is fine and I’m a little hesitant so would greatly appreciate any thoughts.

The property is a nice 3 bed / 2 bath built in the 2000’s in what is probably a B location around Atlanta and is currently renting for $1,100/mo. My current tenant is very solid with way north of 3x income to rent and fairly clean credit but had to move for a job.  Ideally would like to get it rented before the Holidays kick in.

The new applicant we have has good rental history (no evictions, good landlord reference) but pretty bad credit (more than 5 accounts with charge-offs and collections that have just been reported in last 2 months). Their income to rent is a little over 3x including food stamps, but under excluding.  Metrics are definitely below any tenant I’ve rented to before (and lucky for me, as a result I’ve had no issues with any of my tenants).

What are your thoughts - am I being too picky? Also, how long should something like this take to rent? (It’s been about 1 mo and this is the only applicant that has even passed the leasing agent’s screen).

His recent collection accounts worries me. If it was a year ago, I feel better.

But I rented to someone almost similar since July, and so far had no issues. Up till recently, I avoided these tenant as I get "the check is in the mail" problem. Now, I've tried electronic rent payment service where they automatically deduct rent from the tenant account on the first. So I tell them, you're borderline, but I'll rent to you if you're enrolled with ClearNow, the electronic payment service I use. And I tell them make sure the rent money is in the bank on the first.

Another tenant, slightly better qualifications, missed one electronic payment recently, but tells me he had to help a relative out, and spend $29K. I sort of believe him, but I think this guy would be consistently late if not for the auto payments.

One nice feature of these payment services is if the tenant is late with rent payments, it's reported to the credit bureau. Sometimes, I think landlords give a good references to get rid of a bad tenants. So I take landlord references and rental history with a grain of salt.

Don’t modify your requirements/standards to accommodate a potential tenant.  

You said the tenant had "good landlord reference"-- do you mean one reference or many? I would be more concerned if they had only one landlord reference...

Why not wait around for a few more applicants? I normally get 20 or so interested people within a few days that email me about a rental. Of the 20 I choose to meet with 5 or so that I feel give me the best vibe from the emails. I observe their grammer and punctuation and also get to know them a little more by asking questions about their income, how long they plan on renting for, when are they planning on moving in, etc. I would think within a week that you would have a few more potential tenants to screen that may be better.

It's important that you identify your rental criteria, put it in writing and stick to it no matter what. If you don't want a tenant with credit under a 650, then don't rent to anyone, under any circumstances, with credit under 650. These simple steps will serve and protect you for years to come.

I don't think you're being too picky. I would wait for more applicants. It sounds like they barely meet the income requirement and now have a recent history of not paying bills. I'd rather pay the mortgage another month and get better quality applicants than to risk multiple months of rent not being paid because of a bad tenant.

For an SFR, the tenant is everything! I would hold out for the best tenant if you are in this investment for the long term - it is well worth it.

In cases like this you might consider what kind of collections are they? Medical ? utilities? Is your rent lower or higher then the current rent? One landlord reference or more? Why are they moving? Are they a potential good tenant looking for something more affordable or already streched too far? I have used 2.5 x rent at times but heat was included.

We manage about 50 properties, and from experience, make no exceptions. Set a standard. Ours is credit 600+, 3 X rent in income, no cosigners, no evictions, no felonies, and we call their previous landlord and ask them if they paid rent on time and if they would rent to them again. If all that is good, we take it to the owner for approval. 

Every single time an exception was made, or one of our terms was negotiated out, it always bites us later on. We try and eliminate bad applicants by making our application $100, non refundable per applicant over 18years old. If the person scoffs at $100, that sends a message that this person doesn't have the ability to pay $100 towards an important decision. 

If you want it rented before the holidays, incentivize somehow. My idea would be to offer a month of free rent, but have them sign a longer lease term to make up for it. 

Good luck!

Recent collections problems with good income, but food stamps included? You have a full financial picture and it doesn't seem to add up to me. Don't take on someone who seems to have made a turn for the worse despite inherent good value. It's never worth the risk.

@CJ C. , a "good landlord reference" could be coming from someone who wants him out of their house and is trying to pawn him off on someone else. 

I'd pass. It's better to be vacant for one month than go through an eviction.

Collections, bad credit, food stamps, What are you thinking. People never change.

Thank you BiggerPockets community for all your replies and experience! Sounds like I need to stick to my guns and ask for better applicants from my leasing agent.  Maybe also lower the price / incentivize.  Also, if anyone has ideas for a good leasing agent in the Atlanta area - would welcome recommendations!  (I’ve only gotten one unqualified applicant after a month of using this leasing agent which they are pushing me to take - so getting a bit concerned - but I am out of town so would be hard to show myself).

If your agent is pushing this applicant it is time to change agents.

I would advise against lowering your rent if you believe you are at market. All that will do is lower your quality of applicant even farther.

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