Which tenant to choose

Which tenant to choose

Rental Property Investor · Cleveland Heights, OH · Member since 2017 · 54 posts · 32 votes

I recently had a lot of interest in one of my houses during a showing and received a couple of applications from some qualified tenants and I am trying to make the right choice and wanted to get the opinions of the bigger pockets forum:

Applicant #1 - a couple that was incredibly enthusiastic about the property, filled out the application and gave a security deposit at the showing (I told them I didn’t want it until I screened the application, but they said that I was free to tear it up if I went another direction, and they just wanted me to know they were serious. One is a self employed contractor with a verified income of about 7x rent the other is a yoga instructor with a verified income of 3x rent. Great landlord references. The contractor has mentioned his handiness and ability to do maintennace as a potential benefit, I’ve heard that this isn’t necessarily a positive. One has a lower credit score due to having almost no credit history, but absolutely no delinquent payments. The others has good credit. They are willing to sign a two year lease. 

Applicant #2 - three graduate students that are looking to sign a 3 year lease. They each have fairly low wage jobs, but are well above the 3x rent level. They are young and have been living in dorms, so their rental history and credit are not established, but have good references from their schools in terms of their tenancy in dorms (for whatever that’s worth). The benefit for this group is clearly the three year leaden term.

Applicant #3 - a Doctor and his working wife that want a 1 year lease. They make plenty and have good credit, and good references honestly not sure why they’re renting. They are currently my lowest priority just because I’m sure they’re going to leave afternoon one year to buy a home.  

I’d love to hear any advice from the forum. 

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Real Estate Investor · East Brunswick, NJ · Member since 2017 · 94 posts · 71 votes
8y

@Max Briggs

I'd go with applicant #1, their credit, his work background, the references, and the 2 year lease would seal the deal for me. 

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  • Naples, FL · Member since 2018 · 26 posts · 6 votes
    8y

    I have been extremely lucky with tenants.  I also have not chosen the ones always with the best credit.  Sometimes the best people on paper and credit are not good. You have to dig up the internet.  I found what seemed like a perfect renter on paper, but when I dug him up (it never showed on on reports) he had to been to court for rent arrears, DUI's, and domestic assault. 

    I have taken other tenants that were not originally from the US but work for NGO,, where their countries is a cash basis.  I had lived out of the US for over 2 decades with that same type of mentality in that culture.  On paper..would she look great?  No.  But she was perfect and stayed for 3 years tilll shoe bought her own house.  

    I really screen my tenant and go with my gut (and the reports to a point).  I think these days we have more things come up i.e. divorces, health insurance, people taking care of family and their older parents, education, pets that cost, etc.  Some really good people do't have the best  credit due to one stretch of bad luck. 

    FWIW...I had 2 millennial doctors living next to me. (they rent).  Specialists at the best hospital in the country, with kids.  I think doctors sign contracts sometimes so maybe that is why they rent..not sure where they will be.  I'm sure they look good on paper.   I can tell you maybe they pay the rent on time...but they are REALLY MESSY on all levels.  If they were my tenant..I would not be happy.  So it comes down to your gut and the paperwork together.  Google the heck out of people. Sad but you have to. 

  • Rental Property Investor · Lanai City, HI · Member since 2018 · 64 posts · 70 votes
    8y
    I’d take applicant #1 for sure. Graduate students could be trouble and locked into a longer lease. Doctor is going to buy his own place, maybe he’s just checking out the area for a year. Good luck!
  • Real Estate Investor · East Brunswick, NJ · Member since 2017 · 94 posts · 71 votes
    8y

    @Max Briggs

    I'd go with applicant #1, their credit, his work background, the references, and the 2 year lease would seal the deal for me. 

  • Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    8y

    I also would go with tenant #1, but do some more googling and social media searches on both of them. Make sure they also have good employment history meaning check out older tax returns.

    Ask to see some of the work for the contractor just cause too :)

  • Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    8y

    You didn't mention smoking or animals, so all being equal I'd go with #1.

    Docs and nurses tend to be upper crust picky. Roommates are a dramatic reality show waiting to happen.

    Always ask of anyone smokes and how many animals they have!

  • Investor · Tarpon Springs, FL · Member since 2018 · 49 posts · 11 votes
    8y

    #1 for the reasons others mention above.

  • Member since 2016 · 13k+ posts · 12k+ votes
    8y

    Unlike others I would be hesitant of applicant #1. Red flags....Overly enthusiastic applicants offering to do maintenance work is usually used a s distraction hoping a landlord will over look something. I would be extremely cautious in doing a back ground check to confirm previous landlords. Do a internet search on both their names and the company. I also do not like the offer of a 2 year lease, another red flag attempting to lull a landlord into not doing a thorough search. #1 is sending off bad vibes.

    Maybe on grad students, they are usually fairly solid, definatly not on a 3 years lease. I would sign a one year with students.

    I like the doctor, no hidden bad vibes, I also like the one year lease. Generally I would prefer M2M when renting to strangers but feel positive about a one year with a Doctor.

    Contrary to other landlords a long term lease is not a positive in my books. They will stay exactly as long as they stay regardless of a lease. A long term lease offer is basicly a hidden bribe for nieve landlords. Long lease allows your tennat full control over a property with the ability to still leave whenever THEY choose. I do not fall for that trick.

    My choice would be #3 hands down with a distant second choice being the students.

  • Investor · Kapolei, HI · Member since 2016 · 34 posts · 14 votes
    8y
    @Max Briggs, As a landlord myself, It's great that you have many options to choose from. Everyone of these potential tenants has a story to tell, all of them aren't bad. I remind myself time and time again It's a business decision, not a personal decision. To be honest, as landlords, we don't really know what type of tenant they'll be until they become the tenant. As a word of advise, when the potential tenant(s) fill out the lease agreement, add addendums, to protect yourself and always follow through with them.
  • Financial services executive · Frederick, MD · Member since 2015 · 609 posts · 341 votes
    8y

    #1

  • Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    8y
    Originally posted by @Thomas S.:

    Unlike others I would be hesitant of applicant #1. Red flags....Overly enthusiastic applicants offering to do maintenance work is usually used a s distraction hoping a landlord will over look something. I would be extremely cautious in doing a back ground check to confirm previous landlords. Do a internet search on both their names and the company. I also do not like the offer of a 2 year lease, another red flag attempting to lull a landlord into not doing a thorough search. #1 is sending off bad vibes.

    Maybe on grad students, they are usually fairly solid, definatly not on a 3 years lease. I would sign a one year with students.

    I like the doctor, no hidden bad vibes, I also like the one year lease. Generally I would prefer M2M when renting to strangers but feel positive about a one year with a Doctor.

    Contrary to other landlords a long term lease is not a positive in my books. They will stay exactly as long as they stay regardless of a lease. A long term lease offer is basicly a hidden bribe for nieve landlords. Long lease allows your tennat full control over a property with the ability to still leave whenever THEY choose. I do not fall for that trick.

    My choice would be #3 hands down with a distant second choice being the students.

     I agree with all the red flags Thomas has noticed. Personally, I would still put them above choice 3, but I would only choose them if I was able to do a very thorough background check on them, to assuage any issues those red flags throw off. 

  • Member since 2016 · 13k+ posts · 12k+ votes
    8y

    "I would still put them above choice 3"

    Is that because of the 2 year lease, if so you may be disappointed and should disregard the lease offer in considering their desirability. A decision on a 2 year lease will be a mistake since I believe they are going to be very difficult tenants. Guaranteed he will want to trade work for rent. Do work without permission, not pay rent on time etc. Term leases only benefit tenants, long term leases are not a guarantee of how long a tennat will stay.

    Max...take #1 and come back in 6 months and let us know how it turns out. 

  • Bend, OR · Member since 2017 · 7 posts · 2 votes
    8y

    I have found that issuing clear screening guidelines up front with the application that includes requirements such as verified income three times the rent, acceptable credit, 2 years of favorable rental history, no criminal record, etc. Then the first complete application package received that meets all Screening Guidelines is who you rent to. This eliminates discrimination accusations from the people you decline. Many times no one meets all of my Screening Guidelines so then I rent to the strongest application. The Screening Guidelines document is a great tool to have a legitimate, non-discriminating reason to decline applicants.

  • Member since 2016 · 13k+ posts · 12k+ votes
    8y

    "non-discriminating reason to decline applicants."

    It sounds almost like you are afraid to do the job.

    As long as you have non discriminatory guide lines for screening you can never be convicted of discrimination. Anyone at any time can accuse you of discrimination regardless. If I were more qualified than the applicant you accepted I would want to know why you discriminated against me since I should be the obvious first choice over a less qualified applicant. 

    As for accepting the first qualified that is not proper screening practices. You screen to find reasons to reject applicants not to accept. Choosing the first qualified over the best qualified not only places you at higher risk it also does a disservice to all other applicants. You are not mitigating your risk you are throwing darts at a board.

  • Rental Property Investor · Cleveland Heights, OH · Member since 2017 · 54 posts · 32 votes
    7y

    @Thomas S. I am just posting an update to this thread and your request to report back in six months.  I chose tenant #1 and so far everything has been excellent.  Their rent is on time every month, I haven't received a single phone call, and they are taking great care of the property inside and out.  The garbage disposal went out in month #2 and he did indeed ask if he could install the new one himself and knock the purchase price of the new unit off of the rent, which I agreed to.  I checked out the install and it was done well, and he didn't request any additional money for the labor for the install, so I considered it a win.  I did a thorough screening of prior landlords and employers to reduce risk from the red flags, but didn't go beyond what I typically do for other tenants. 

    As for the lease term, it was me requesting long term leases to compete with other applicants looking for long term leases.  However, I think everyone made good points that the long lease term actually works out in their favor not mine, so in the future I may stick to one year leases and renew as necessary.  

    Thanks for all the discussion.

  • Member since 2016 · 13k+ posts · 12k+ votes
    7y

    Congrats, nice you came back to report. Only advice I would give is to never give rent reductions. Maintain full rent and pay tenant for work. This keeps your business "clean".

  • Rental Property Investor · Cleveland Heights, OH · Member since 2017 · 54 posts · 32 votes
    7y

    @Thomas S. Good advise.

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