Would You Rent To This Applicant?

122 Replies

Hi All,

I've recently had someone apply for a 1 bed 1 bath apartment I have for rent. I'm having a hard time deciding if I should accept the application or not and would greatly appreciate any feedback one way or the other. Here are the pros and cons below.

Pros:

Has a part time job and seems clean and responsible. Nonsmoker, no pets.

Has kids in the area and plans to stay longer term...several years or more.

Has $60,000+ in savings. Am awaiting bank statements to confirm this.

No criminal history or prior evictions. Owned home prior to this. 

Willing to pay a years rent in advance and do month to month for the lease. Instead I'm considering just asking for a double security deposit though. 

Cons:

Has a chapter 7 Joint bankruptcy with her (former) husband on file from 03/2017. 

Has a joint credit card with a $13,000 limit that has $13,600 on it currently and is 30 days past due.

Has several other joint credit cards that were cancelled. 

The rent is $715\month but she only brings in $1,700\month currently. She said her lawyer told her she should get at least $1,000\month in alimony starting in January though which would bring her monthly income to $2,700. 

When asked about the bankruptcy and past due\cancelled cards, here is what she wrote in response.

"Earlier this year I had found out that my husband of 31 years was having online and in person affairs and after some marital counseling I decided to get a divorce as he was continuing his behavior. This resulted in the Joint Bankruptcy as finances were a problem. The Chase line of credit is a joint account for his car which he is supposed to be paying on and has been sporadic in his payments. My attorney is currently dealing with him on this. The accounts that were cancelled by the creditor were due to the bankruptcy.

Just to add: the divorce situation is non-contested and there are no problems with violence or anything else. We have both decided to go our separate ways. I am looking to move to the Reading area to be closer to my son and his family who live in Sinking Springs. I am very interested in the W Walnut Street apartment as it is in a safe neighborhood and I think it would be good fit for me. I hope you will be able to make a positive decision in choosing me as the tenant."

Taking everything into consideration, including large amount of savings, would you rent to this person? If so what precautions would you take...is getting a double security enough and doing month to month for the lease? Any input is greatly appreciated. Thanks! 

You said she’s willing to pay a years of rent in advance? Isn’t that precaution?

Having recently gone through a divorce I can understand her explanation. Bad things sometimes happen to good people. Maybe I’m missing something but, I don’t see this applicant as borderline.

Interested to hear how you go.... good luck man

@Tim Porsche   It would probably be a good deal for both of you if she prepays the year's rent.  If she has defaulted on debt to the same bank she has the money in, it might be soon taken to cover those debts.

I would have already rented it to her and would be making it rain with her year's worth of rent as I take her lump sum money and invest it into my next deal lol.

Yeah, if she's willing to pay a year's rent in advance, I don't know why you would blink.  Not really sure why it would be a M2M lease though.  If she move out, does she get the rest of her prepaid rent back?

I always take pride in helping people out in a bind, especially if there is minimal risk.  The bankruptcy is kind of irrelevant if she pays a year in advance.

I'd say take the money, and she has a year to get back on her feet.

@Tim Porsche , you should have enough applicants to not have to consider this applicant, no? This applicant sounds like a Train~Wreck to me. A long time ago, I was in small claims court to sue an ex tenant, twice, and it is not fun.

If it were me, I would "Forward~Think" long and hard. And say forget it. But that's just me. My 2 cents.

Best to you.

Daniel F. Harb

Would sit down with her and slowly go over her financial life for the past decade. More often than not, the divorce is just the tip of the iceberg toward understanding a lifetime of bad habits. Not saying my decision would be no, just would not let a year paid in advance blind me to other her other potential character flaws. 

@Tim Porsche Current income is clearly insufficient to pay your rent. Savings could be blown in a spending spree - this person is a former bankrupt, right? WIth a delinquent  and over limit credit card account, which gives you an idea of how she treats her current creditors. Do you want to join them and become one of her  creditors also? I had a prospect this weekend who admitted to shockingly bad credit and he tried to bribe me with $6,000 cash up front so that he could move in from the hotel he was staying in. I said no because it is extremely difficult to get evictions here in Ontario which causes experienced landlords to act with much greater self discipline. You have to if you know it will be like pulling teeth to get your property back from a deadbeat and that the process will last for months and cost you thousands. But my bet is that you are flirting with a similar process in PA here Tim. Evictions are no walk in the park. Why would you do this to yourself? If her income really is going to be that good in future tell her that is great - and she should come back and see you when she has proof of that income coming into her bank account and a written agreement showing that her former spouse is obliged to pay it. Otherwise I suspect you are just going to get wrapped up in a bunch of stories and nonperformance. Strong tenants do not offer up front payments because they do not have to; their credit is good. The problem with up front payments is that when the money runs out the payments are likely to stop completely and you are left with a non paying tenant and their stories, very likely plus damages, and your own regrets.

There are better tenants than this and you should keep advertising until you find one.

Thanks everyone, appreciate all the feedback! It seems like most of you are fairly evenly split between yes and no. For those of you saying no would you consider agreeing to the following with this applicant? 

1. Sign a 10 month lease, ask 10 months rent in advance by certified bank check.

2. Require 2X security deposit instead of the regular 1X. 

After the 10 months are over, it would just go to month to month. If she would end up not paying at that time, I could simply give 30 days notice and end the lease. Good idea? Yay or nay? 

@Stephen E.

Account Closed

Well said, @Stephen E.  When I had that "Nightmare" tenant in my property in Rancho Santa Margarita, California, and she would not pay rent, the eviction process in California was excruciating. All the while, I was waiting for the eviction, I see her and multiple people traipsing in and out of MY HOUSE, rent free! I told my attorney that I wanted to go over there and throw her and her cat out! 

My lawyer said "calm down, and have a beer"... I told him "I don't drink"!!!  Ha! Finally, the sheriff got her out. I would never rent to someone that was not super~clean with every single thing. But, that's just me. No time at all for that. :)

Anyway, suffice to say, "Nip it in the bud", it is most definitely not even worth considering.  :)

Good luck to you!  $$$

.  

Depends on your local landlord tenant laws.

Pro: Got a year’s worth of rent up front.

Cons: Can’t kick her out for non-payment of month-to-month cause judge will say she pre-paid you. There’s no way your local laws allow for a years worth of security deposit to be collected. Now after Year 1, that’s a different story, and I’d worry about Month 13 onwards depending on how quickly and easily you can evict someone if needed. Remember she’s brokanese, can’t take her to court cause she makes squat - so you already know that avenue is closed.

Tim, have a good tenant now for over three years that was foreclosed on prior to lease. Decided to take a chance on them after spending an hour grilling them. I have 14 years of mortgage and lending experience, so decision making process possessed a depth of experience in looking at peoples credit. Everyones experience and risk tolerance is different, as well as different state, county and city law concerns variations. 

@Tim Porsche When the up front cash runs out you would just be left with a bad credit risk who is stiffing the creditors she has already, again.  Remember this is a repeat performance, she is a bankrupt. The promised up front payment is blinding you to this reality. I just had to chase a bad tenant through the courts for $7,000 in damages. As I was driving back and forth having served their paralegal with yet more evidence and having driven to the court house to file yet another Affidavit of Service I swore to myself that there would be no more marginal tenants. Everyone would have to have squeaky clean credit, rock solid landlord references and no behavioral issues. Your tenant does not have these desirable features and is trying to compensate for her deficiencies by blinding you with money. Your eagerness suggests that it is working. She would not offer to pay up front if she thought a landlord would take her application ordinarily as is because she knows that all her characteristics add up to being bad news to landlords who are paying attention. I promise you that evictions and small claims for damages will be sheer torture and will have you rueing the day that you took her money. If you want to get a taste of what it is like, go out and burn $1,000 in $20s in your back yard. If you don't feel sick, do it again. Repeat until you get an overwhelming feeling of senseless waste. Now you know what walking into a really bad tenant situation is like. Once you have been there you realise prevention is far better than cure. You are being given a choice here.

Be careful with your States tenant/landlord laws. You may have to hold advance rent in escrow for her in until the rent becomes due. This is the case in Florida. I would rent to her with all rent and deposit in advance.

Very well said, @Stephen E. @Tim Porsche , the information Stephan is sharing is to save you money, heartache, and time. My tenant eviction cost me many months, many thousands of dollars, and way too much heartache.

I got two judgements against her totaling $9,000.00, and NEVER saw that money again. Unfortunately, she is a professional deadbeat. I vowed never, ever again. I would rather be patient for the RIGHT tenant.

It is not worth it, my friend.

In my humble opinion. :)

Wait a minute guys. This is a one bed one bath apartment we are talking about here. She is willing to give you the money up front because nobody in their right mind would consider it any other way. Could she blow her savings, sure do you care NO. You have her money up front. Now if you live in an area where evictions are a nightmare that is a factor to consider. But so is a years worth of rent up front (think about the boost to your balance sheet). It is only a one bed one bath not a house that could be trashed. 

Please proceed with caution!

First, check the landlord tenant act in your area.  Here in AZ it is illegal for a landlord to require more than 1.5 X the rental rate as a security deposit.  Tenants can offer all day long to pay more (and many of them do), but you can't require it, which makes it a sticky poont when you go to write the lease.  Because if you write it into the lease, it assumes a requirement.  BUSTED.

Same goes with paying the year in advance.  Can't require it.  And  to add....you can't make your decision based on having that option since you can't actually enforce it.

This is a tough one.  Can she provide documentation that the extra $1000 is entitled to her come February?  If so, that would bring her income up to the $2,700, and that is more than 3x the rental rate.  That should be okay.

What is her past rental history?  Or did she own?  Interestingly enough, most Tenants don't mess around with not paying their rent or mortgage.  They have to have a place to live.  So, while their CCs may go months unpaid, and student loans rack up, or medical bills pile high, they usually find a way to pay their rent....and make their car payment.

Tenants come with credit issues.  This is why they rent instead of buy.  So it's really just a matter of determining which credit issues are going to get in the way of them paying rent.  It looks like her BK has cleared out most of it.  I would just require documentation for the extra income, AND the outstanding debt that the husband is resposnible for.  The attorney should be able to provide.  Then it seems like alot of the risk is minimized.

Originally posted by @Stephen E. :

@Tim Porsche When the up front cash runs out you would just be left with a bad credit risk who is stiffing the creditors she has already, again.  Remember this is a repeat performance, she is a bankrupt. The promised up front payment is blinding you to this reality. I just had to chase a bad tenant through the courts for $7,000 in damages. As I was driving back and forth having served their paralegal with yet more evidence and having driven to the court house to file yet another Affidavit of Service I swore to myself that there would be no more marginal tenants. Everyone would have to have squeaky clean credit, rock solid landlord references and no behavioral issues. Your tenant does not have these desirable features and is trying to compensate for her deficiencies by blinding you with money. Your eagerness suggests that it is working. She would not offer to pay up front if she thought a landlord would take her application ordinarily as is because she knows that all her characteristics add up to being bad news to landlords who are paying attention. I promise you that evictions and small claims for damages will be sheer torture and will have you rueing the day that you took her money. If you want to get a taste of what it is like, go out and burn $1,000 in $20s in your back yard. If you don't feel sick, do it again. Repeat until you get an overwhelming feeling of senseless waste. Now you know what walking into a really bad tenant situation is like. Once you have been there you realise prevention is far better than cure. You are being given a choice here.

 This was not presented as a woman who is looking to leave the place in shambles.  It looks like a woman escaping a bad situation in need of someone with a level head to see the situation for what it really is.  She may have had a partner who didn't care about his finances (or respecting his wife), but it appears as though she left in order to CHANGE her situation, and elevate it.  That doesn't sound like what you are describing.....and holy cow, it sounds like you need a hug.  I am sorry your experiences have been so drastic.  I appreciate you sharing them with the group.  It really does help to hear about the extremes.

Just looking at her income should be a red flag. The rule of thumb I've always used and I've heard from others is income should be at least 3x the rent. We get this situation in my area every year around tax time. People have large returns and want to prepay rent. Don't be fooled. Would you want to prepay someone a year of rent? There has to be a reason and usually that reason is they're not good enough with money to budget and live responsibly. Is that the type of tenant you want?

@Tim Porsche Unless applicants are super scarce, which they shouldn't be b/c like the potential tenant said it's a nice safe neighborhood, I would move on. The one year upfront rent sounds enticing however it's almost too good to be true. If you're going to consider this applicant seriously i'd have a face to face sit down interview and see how that turns out.. Good Luck with whatever you decide!  

Funny Cara, I was thinking about tax implications of receiving rent in advance, rather than LL tenant laws, being problems. Presently my puppy is trying to put two tennis balls in her mouth at the same time to maintain control over both of them, even silly little puppies have risk/reward decisions. 

Stick with the minimum requirements you set when screening tenants. Its good to be empathetic but don’t get caught up in their situations. 

If you require a minimum credit score of 650 and the tenant has a 635.. stick to your minimum. If you have minimum household income requirements such as double or triple the rent.. stick with it! Her alimony isn’t set in stone... what if the husband doesn’t pay?

There were times I felt bad turning down a renter, especially after they’ve paid a $40 application fee but I have to remind myself these are the rules of the game.

If you decide to turn her down, you can always pass the buck of blame to someone else. For example, I tell my renters that I just manage the place and the “owner” makes the ultimate decision.  In your situation I would say “ I pleaded on your behalf and explained everything to the owner but they decided not to waive the minimum requirements, If I could rent it to yah.. I definitely would.. I’m sure you’ll find a place better than this one anyhow.”