Rental Property Investor / Construction Manager · Raleigh, NC · Member since 2015 · 201 posts · 103 votes
Hey BPer's,
I have a question. I currently own a small portfolio of rentals that I manage and I have recently been contacted by a 3rd party social service that helps people find and secure rentals for them. The 3rd party would pay 80% of the rent and the tenant would pay 20%.
I have qualified many tenants before but this is the first time that I have run across this. My question is if anyone else uses this type of service and what criteria would you use to qualify them? My typical criteria is a credit score above 600 and 3x monthly rent in gross income (plus some others that really don't apply to this question). Would I require the tenant to meet this credit score and income. If I am qualifying the income with the same standard and they are paying 20% of the rent (say $200), then should I require them to only meet an income of $600/month? Both parties would be on the lease as well.
Please let me know if anyone else is doing this and how they are doing it. Any advice would be appreciate and let me know if there is anything that I should be watching out for in this situation.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
8y
We get calls from agencies like the one you are describing all the time for our rentals we fill here in CT. While these relationships can work out, very often they do not simply because tenant candidates do not meet minimum screening requirements.
Screen these tenants the exact same way you would otherwise and just adjust the income requirement for how much they actually have to pay.
Keep in mind that these programs are often short term arrangements for the agency/client, so you definitely want to get a very clear understanding on the role of the agency in the tenant/clients life and how long they will be around to help them pay bills. Most of the time the only reason you would accept these candidates is because of the agency helping them, but what if they go away after a year and you are stuck with a tenant that is struggling to pay rent? Just something to consider.
Also, make sure you are adding some sort of criminal history & eviction component to your screening criteria. They help weed out the types of tenants I am assuming you are trying to steer away from.
Investor · Denver, CO · Member since 2016 · 220 posts · 98 votes
8y
For me, regardless of whether it is a 3rd party entity or a roommate, all parties have to qualify on their own. Meaning should something happen, I would like to know that any one person can cover the rent as I do not have time to be doing the split thing because things happen, people have a falling out and at that time I need to know that my rents will be paid. So I hold all parties jointly and severally liable and that would mean they also all need to pass my screening criteria, but that's just me. Cheers!