Which tenant would you choose?

55 Replies

My husband and I just finished up the renovation of our first investment property, which we'll be using as a rental.  Our dilemma is choosing between two couples we met today.  Please help us!!!  Keep in mind, this house is located in a rural/suburban small town in Georgia.  It's a 3bd/2ba, 1500 sq. ft. house, built in 2005, 1.5 acres of flat land.  House is worth 135,000.  Rent will be $1200.

Applicant 1:  28 year old male, works as foreman at sandblasting company, earns $6000/mo, doesn't have much credit, credit score is 530-ish.  23 year old female, stay at home mom to their 2 year old daughter, female will start nursing school soon, she says, she has no credit history.  Together, they currently pay their landlord $500/mo.  They are engaged.  They were very nice people (part of why making the decision sucks!).

Applicant 2:  21 year old male, insurance salesman, college-educated, earns $4000/mo, 3-4 open credit cards/student loans, all paid on time for the last 2 years, 1 cell phone bill ($500) that went to collections.  21 year old female, works full time as a tech at hospital while attending nursing school, earns $1800/mo, 3-4 open credit items, all paid on time for the last 2 years, 1 medical bill ($160) that went to collections.  They currently pay landlord $1100/mo.  They have a dog, and agreed to pay the extra security deposit.  They are not married, and they were also really great people.

I'm going to verify employment and landlord info tomorrow.  What would you guys do???  I didn't realize how much I would hate making decisions about who to rent to.

I usually go with who applied first if they are similar.

@Julie N. that's a good call!  Do you think these seem pretty similar?  There's definitely pros and cons to each.

With all other things being equal, if two person's / couples apply at the approximate same time and both are approved (or pending verification look like they will be at first glance) - I'd let both know what their security deposit will be and whomever pays first gets it as long as everything checks out. Local laws might impact this, but I often take holding deposits as some percentage or all of the security deposit to gauge seriousness and means to perform. It is often at this point that whomever was technically first to apply may be revealed to not have the money ready to proceed right then, when the other party does.

Beyond that, I'd normally be inclined to go with the couple that has dual income and a more established credit history; however allowing bills of $500 & $160 to go to collections needs to be questioned - and if accepted as tenants, I would require a larger deposit for that reason. Allowing "small" bills to go to collections when income would seem to be present to handle it raises all sorts of red flags for me.

@Jonathan Taylor Smith thank you so much for your insight.  That's a really good idea on the "sprint" to the security deposit.  I hadn't thought of that.  I agree with you on the collections thing.  I wanted to chalk it up to just being young, but then I suppose that impacts everything else they do...since they're still young.  Maybe I should ask what that was all about.  Couldn't hurt.  Aargh, I so wish there was an easy way to decide.  My gut instinct is not being helpful, as it has swung back and forth as far as who is the better choice!

You have put information in there that should not be considered because of Fair Housing. Age, Sex, Familial status

They both sound good. I’d go with the first to apply, and give them 48 hours to sign a DTH.

@Russell Brazil thanks for the heads up.  I knew that, but I suppose I was just trying to paint the whole picture.  As much as we try to be completely objective when choosing, it's basically impossible, since we're human.  Once we meet the applicants, objectivity is really hard to hold on to.  I think what I'll do though is write out the comparison of the two, without those factors, and see how they line up.  Granted, it may not help me at all, since they are basically the same age, same sex and same familial status.  Oh man, this doesn't get easier.

@Mike Lauer , I'm so happy to hear you say that!!!  I like so much about both applicants; I just wasn't sure if I should try to be pickier (I'm so new to this).  The last thing I want is analysis paralysis, considering we want to do this long term.  Thank you so much!

I'd go with applicant #2. 

The first applicant would be more than doubling their current rent. That is a big time jump are they sure they can handle that?

#2 also has 2 years of paying things on time for both people. That's also a plus. 

To me this isn't really that close. #2 wins hands down.

@Derek E. thanks, Derek!  I had definitely thought about that, as well.  I guess I was thinking since the income was the same for both parties, it may not be a huge consideration.  But that definitely can change a lot when your housing payment jumps by so much.

@Kelly Bellini How long have you been looking for tenants? The first candidates are inexperienced and as others have noted their rent would be doubling in moving to your property. The second candidates have two accounts that have gone to collections. They have a habit of not paying bills, maybe they won't pay yours. I would keep looking if I were you. Bad tenants are bad news, it is far better to forego a month's rent and keep looking than it is to let in a marginal tenant and have to deal with the problems they bring you.

@Stephen E. you make an incredibly good point.  It's been 1.5 days (I'm now making an embarrassed face.).  Honestly, we got so many responses (though we only showed to two couples), it felt like I had to hurry and act.  But, you are right.  I need to take my time.  Why didn't I think of this?!  I feel like you just talked me off a ledge :)

I would go with #2.  The big thing that stands out to me is the rent increase on #1.  They will also be going through some changes when/if the mother leaves and starts taking on educational responsibilities.  The lack of credit/work history also would concern me.  However, some of those considerations may not be entirely legal.

I would be going with the sandblaster . Makes 6 grand a month . He is foreman , he has responsibility .  The second is 21 and a insurance salesman , he cant be doing it that long and hasnt built up much of a book of business so his income will go up and down .   When both of the women go to school , that will be an expense . No 1 will help pay out of his 6 grand and add day care to the bill . No 2 all her pay will go to cover school costs  to go to school full time reducing the income to 4 grand .

OK, so I got some new info.  On couple #1, after using "MySmartMove," it turns out that for the male, who is the breadwinner, there is inconclusive info, since he barely has a credit history.  Granted, this is because he never opened a credit card and always paid cash in life (I totally respect this, but it doesn't bode well in this situation).  But he also appears to have one item that went to collections (started at $1000, but he paid down and balance is now $100).  For the female, her stuff turned out ok, as far as showing 4 years of on-time payments on two credit items.  BUT, she has $5000 in medical bills that went to collections.  Should I just keep looking?...

@Kelly Bellini  I would reject both and move on to the next applicants. There are stronger tenants out there and it sounds like your unit is desirable. Your life will be a lot easier if you are patient and look for a strong candidate to be your tenant. Bad tenants can cause you terrible problems and both these candidates are relatively weak in my view. The problem with weak tenants is that their problems become your problems.

@Matthew Paul thanks for that perspective.  Aaaargh, why isn't that getting easier?  I'm so impatient; I think I need to step back and keep looking through applicants...

Applicant 1 because they are more likely to be stable 

I agree with Stephen, I would keep looking.  Make sure the income is verifiable and they provide last 4 weeks of pay stubs to show proof. I don't like to see any bills sent to collections, especially if it's something over the past 3 years. 

Take your time and do multiple showing. If you're questioning whether to rent or not to a particular tenant numerous times and can't make up a decision, it's probably not the right tenant. You'll have a good gut feeling typically when the tenant is "the right one". It's better to take your time and screen very carefully than risk being stuck with a bad tenant and dealing with evictions and $$$ spent on legal fees, vacancy, and more :)

Just my 2 cents

The 10x rule is for your business goals, not emotional attachment to applicants lol.  The one that is not selected will fade from your memory very quickly.

The dog would be happy on 1.5 acres but sounds like you have enough demand to list this unit as no pets.

@Kelly Bellini ,

I would go with  couple #2--- they are use to living off 1100 mo/rent, so there wouldn't be any lifestyle change.   Couple #1 has a rude awakening of what $700+ gone a month  feels like, then all the sudden $$ gets tighter!    I also like dual incomes over 1 breadwinner-- what if  he loses his job vs. 2 incomes!   Also, applicant #2 would be more favorable IMO because lifestyle wise, their expenses will likely be less ... and she's already in school, so the likelihood of her earning more is much higher!   Good luck!

The first tenant seems a bit better.

Originally posted by @Russell Brazil :

You have put information in there that should not be considered because of Fair Housing. Age, Sex, Familial status

That only matters if she's using a Realtor. Fair Housing Act does not apply to an individual landlord renting his/her own property without use of a Realtor. (Although locals laws may be more restrictive.)

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