Hello all & thanks for reading. Apologies for not being on the forums for a while, I felt I'd learned all I needed to get started & now I'm screening tenants for my first rental property! I have a SFR for rent, i'm using the application from Brandon Turner's book on managing rental properties & the qualifications listed there in. I have a tenant with a 610 FICO, a recent BK from a divorce (so no debt going out each month), however he has a son over 18 who is splitting time between him and mom.
My question is, what do I do with the adult son? Background/credit? Co-sign the lease? Nothing if listed as a dependent on tax returns (did some searching on the forums already). A little background on the tenant, he lives in the area in a rental with some serious plumbing issues & has said they're willing to let him out a month prior to lease end due to circumstances, or if they won't honor that statement, he's willing to leave early & double pay rent that month to not loose our listing. No evictions or late payments, 30k in the bank from sale of prior home, social security of rent due each month & still working bringing in 3x rent each month. I like not paying holding costs by getting it filled, but don't want to get into a situation if son may be a problem. What would you do/have you done in a similar situation?
For my rentals anyone over 18 is added as a lease holder and has a background check. No exceptions.
i would ask for the highest amount of security deposit you can legally ask for also
Thank you @Rob
@Rob D. undefined. I appreciate that. Those were my feelings as well, my wife wasn't sure.
When I was in multi family property management as a property manager I had to audit applications after we ran the application through our screening company.
The way we did applications was anyone over 18 years of age would need to complete the application. As long the applicants made 3x the rent they qualified on the income side whether it was just one applicant or all applicants income combined.
The positive side for the 18 year old son is that he is able to build good rental history if payments are made on time.
I always encourage if finances allow to invest in a company who screens applications for you. That why you have set a standard renting criteria for what you feel is a qualified renter for your properties.
Deposit criteria would also be set with the screening company so when the application is ran the amount of the deposit would also be shown on the report.
It helps eliminate any emotions towards people's situation and stick to the qualifying criteria. It also treats everyone equally when it comes to the screening process. In property management we were big on making sure we did not violate any Fair Housing Laws.
I would not be concerned about the son being a problem I would focus more on do they qualify together to the criteria you have set you feel is qualified renters. Since you are doing the application screening yourself I would charge what you feel is a fair deposit knowing all the information they provided on the application.
Hope this helps and good luck!
Originally posted by @Steve Christmas :
Thank you @Rob
@Rob D.undefined. I appreciate that. Those were my feelings as well, my wife wasn't sure.
To my screening and application process everyone is treated equally. I’ve turned down priests, lawyers, doctors, cops, firefighters, sec 8. You name it I turned it down at some point.
Thank you @Lisa Stewart , I do use Cozy.co for my background & credit reports & that's a good point about building a rental history, they also report to credit bureau for rent as a real estate trade line. I suppose the best way to tackle this is treat it the same as if they were two unrelated co-tenants, even though dad alone qualifies.
Yes, I would do a background check on the son as well. With that said, as long as dad qualifies on your criteria for income & credit score, I don't think you should hold it against him if things aren't as favorable for him on that end. Personally, I would ask them if they want him (the son) on the lease. If so, great. If not, that's fine too. I don't care if he's on the lease or not. But I do run background checks on every adult whether they move in at lease signing or afterward. I just want to know who's living in my property.
As for his claims that his current landlord is going to let him out of their lease early, I would take that with a grain of salt. It might be true and it might not. Call the landlord and ask him why the tenant is moving. DON'T ASK IF HE'S MOVING DUE TO THE PLUMBING ISSUES!! Just ask the question and see what he says. Listen to voice tones. He may just want to get the tenant out of his house and pass him off to you. Also, ask for the previous landlord's contact info. This landlord will have no reason to lie to you about the type of tenant he was.
You also want to verify whether or not he's paid rent late or not. Don't take his word, or even the landlord's word for it. Ask for bank statements, he should be able to easily pull this up online and email it over to you. This will let you not only verify when he's paying his rent, but also verify that $30k in the bank and verify his income.
@Cameron Norfleet , thank you & great advise. I'll be collecting landlord contact for previous 5 years & contacting every one. One thing I've definitely learned from the 150 or so biggerpockets podcasts I've heard so far is to screen on the front end to minimize headaches on the back. Open ended questions on the landlord's part is sage wisdom for sure. Thank you all so much, I'm excited to be officially joining the pack!
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