Rental Property Investor · Austin, TX · Member since 2016 · 40 posts · 17 votes
I recently met a potential tenant that I fell in love with. Very sweet personality and she was excited about the uniqueness of the property.
I checked her credit score and it was not great (595), has a history of some late credit card bills, and has a DWI. She said she's been living with her parents so I wonder if she just had a rough spot and moved past it. She also has $30k in student loans.
Is it a terrible idea to let her rent, even if I have a cosigner? Or should I move on to the next one?
Property Manager · Syracuse, NY · Member since 2016 · 601 posts · 384 votes
7y
@Jennifer Jackson credit doesn't really matter as much as you'd think. Of course you're looking for someone who is responsible with their money, my personal score ranges from 580-720 every few months and Ive never had a single late payment in my credit history.
The biggest things I look for are previous evictions and debt to income, do they make enough to pay their rent? Typically they should earn 3x their monthly rent but only you can know your markets living expenses, things may be cheaper or more expensive where you live than where I live. If you're comfortable with the tenant, they can afford the rent, and have no previous evictions then you should feel comfortable renting to them.
Lender · Boston, MA · Member since 2018 · 22 posts · 17 votes
7y
@Mike M.
You take 25k from a lease option client and use it to buy another property? You are not holding that in an escrow account? Do they forfeIt the deposIt if they dont buy the property?
Wow!!
@Mike M.
You take 25k from a lease option client and use it to buy another property? You are not holding that in an escrow account? Do they forfeIt the deposIt if they dont buy the property?
Wow!!
Nothing special. It's non-refundable. You can see how that works here:
Madisonville, LA · Member since 2018 · 125 posts · 71 votes
7y
It doesnt take but a few blips to get a 595 credit score. And I've known plenty successful people with DUI's. If they met my other criteria I could deal with those issues
IN our business the purpose of doing screening is to lower or eliminate risk. A low credit score for example is a indication of the % possibility that the individual will default again. For a landlord a tenant defaulting will likely mean a late or no rent payment.
IF your goal in screening is to reduce risk then not following your screening standards means you are increasing your risk. Increasing your risk means that you are willing to take a greater loss.
Finding reasons to accept a unqualified applicant is not the purpose of screening, it is to find reasons to reject applicants. IN this case you have more than enough reasons to reject this applicant. By not doing so you are willingly opening yourself up to a loss.
Increasing your deposit requirement does not reduce your risk of a loss or facing a eviction. Nor does having a co-signer. What it does is make you believe you are mitigating your risks. The best time to avoid having to go through a eviction is during your screening process.
There is no point in having standards if you are going to ignore them. A stop sigh is not a suggestion.
Property Manager · Syracuse, NY · Member since 2016 · 601 posts · 384 votes
7y
@Craig Sloan A tenant in these cases who may be over strutinized in other areas may also be a tenant that is going to stay longer because of those "problems". The credit score is not an issue at all in my mind, it's not that low. You should be looking at her income in compared to her debt. She has student loans so she cares about being responsible, DWIs are terrible but they also have no indication on the tenants financial standing nor do they necessarily indicate poor character. Millionaires get DWIs, I am not down playing the seriousness of the DWI but I am arguing the correlation between having one and their ability to pay rent.
I understand where you are coming from @Ronald Starusnak but that has not been my experience. I am probably more conservative than most on who I will rent to but to me the DWI speaks to her level of responsibility.
Whatever your criteria’s are, stick with it and follow them religiously.
Co-signers are typically a bad idea and I’m not a big fan of them.
I don’t suggest you fall in love with tenants, just fall in love with your business model.
This young gal wouldn’t meet my criteria.
#DUXOV
Great advice here. Make sure you stick with your criteria or be willing to get sued.
I disagree with the Co-signer, however. We have had great experience with co-signers. We do a full background check on the co-signer and also require double deposit. There are only a few things we allow a co-signer on. Low credit or low income due to being a student.
Buffalo, NY · Member since 2013 · 106 posts · 75 votes
7y
Just thought I'd share my thoughts on a DWI or DUI based on what I've learned owning a screening company (RentPrep) for over 10 years.
Most landlords do not put a lot of value on these types of criminal records because they're not violent crimes. And the landlord is not wrong valuing criminal offenses based on the nature of the crime - in fact, HUD requires this now since blanket policies are no longer acceptable. However, DWI's and DUI's specifically are VERY expensive and I've seen more than a few cases where the tenant ends up in financial trouble after paying out all the fees associated with these offenses.
So for the sake of screening tenants, the age of the DWI/DUI records is critical. If the charges are recent they have the potential to impact the tenancy financially due to court fees and attorney fees. For this reason a lot of landlords we work with create screening criteria that values a DWI/DUI much higher if the charges are less than a year old. These types of criminal records are reportable for 7 years from the filing date, so you could see older records that should no longer have a financial impact on the tenant.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
SO How many more red flags do you need ? Is it okay if she was in prison for theft ? How bout if she was an axe murderer ? “ oh but she’s so nice kInd and good and loves the place “ you can bet where there’s young ladies who run bars and Irresponsible, there’s going to be guys coming and going in that unit causing you grief .
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
7y
You aren't going to live with her...... you don't need to like or love her...in some ways its better that you don't. You need her to pay the rent and take good care of the property...PERIOD. Take the emotion out of it and stick to the numbers and your criteria. This one has plenty of red flags to pass on....
The only time emotion plays a roll is when there are 2 equally and highly qualified candidates that you need to choose one over the other....or you have a qualified candidate but something in your gut tells you something isn't right.....otherwise its all about the numbers to mitigate your risk. DO NOT talk yourself into ignoring the flags and numbers because you "like/love" someone that applied
Income stream and history of paying the bills are the top prioroties
Jersey City, NJ · Member since 2013 · 10 posts · 6 votes
7y
@Jennifer Jackson There are a couple of red flags here. Some more manageable than others. Credit scores don't scare me much DEPENDING on the circumstances. Student loans are a great example of what I'd be more lenient with. How long ago was the DWI, and has this court issue already been resolved? How long have you been looking for a tenant? Do you have other applicants? If this is your only applicant than have you tried letting a local Realtor give it a go? Rental Listings in NJ are at no cost to the owner, and by casting a bigger net you may find the bigger and more qualified fish :)
Yuma, AZ · Member since 2015 · 140 posts · 137 votes
7y
@Jennifer Jackson You never know really. I have a guy did 15 years in prison. Did the regular checks on him not great but he is a hard worker with a family now. Has been no more than 3 days late 2 times but calls me before end of month if will be late. Is a good rentor for a year now. Good luck.
Belmont, NC · Member since 2018 · 2 posts · 0 votes
7y
I think it depends if you're managing for yourself or for others. If for others you need a fixed set of criteria consistently managed to. Personally I manage a portfolio for myself so have some more flexibility. I like to look tenants in the eye and see if they are turning their lives around and sometimes make a bet on them and let them know I'm doing so. They tend to be very grateful and do whatever they possibly can to be a good tenant. To me its a lot more than just about rigid criteria. I personally want to see most importantly that they have 3x rent in earnings. I look at lower end properties with lower end people so 595 credit score is amazing(ly good) in my world! Depends on the market you serve.
Real Estate Agent · Brooklyn, NY · Member since 2018 · 18 posts · 4 votes
7y
@Jennifer Jackson don’t do it! Not worth the headache. That is a terrible credit score and delinquent payments are a sign that she makes a habit of not paying.
Great question. Having a low credit score is bad and good all in the same. Why good, because they will be renting for a long time. The key is their job security and income. Without a consistent income, they won't be able to pay you. GET REFERENCES! From past employers and landlords. I don't like the DWI as it speaks to their character. Ask potential tenant what caused the late payments. Definitely co-sign from someone like a parent that could be held liable for rent payment. You could ask for 1st and last months rent and a separate deposit to be on the safe side.
I recently met a potential tenant that I fell in love with. Very sweet personality and she was excited about the uniqueness of the property.
I checked her credit score and it was not great (595), has a history of some late credit card bills, and has a DWI. She said she's been living with her parents so I wonder if she just had a rough spot and moved past it. She also has $30k in student loans.
Is it a terrible idea to let her rent, even if I have a cosigner? Or should I move on to the next one?
As others have mentioned, stick with your criteria. She sounds like she has problems. I wouldnt necessarily say no because of a DWI, if it was a while ago, but a DWI and bad credit, no thank you. And lets be honest, that isnt just bad credit, that is terrible credit, and she likely still owes someone money.
What we find is its much better to have vacancies than to deal with tenant drama. in the long run, vacancies are a lot cheaper.
And if I look back, EVERY single time we have not stuck to our guns on our criteria, or been willing to take a double deposit, or whatever, its been a really bad mistake.
Thanks for the replies everyone! We've decided to up her security deposit and ask for proof of income 3x rent.
I would always ask for proof of income. You will find a LOT of people either dont know their income or they will flat out lie about it.
Had someone years ago tell me they had a 8K/m income, but were self employed and got paid in cash, they owed me their bank statement and they had something like 20 separate overdrafts. We didn't walk away we ran from that one.
Investor · Almont, MI · Member since 2015 · 361 posts · 302 votes
7y
I agree...we try to be forgiving with past mistakes but if it is behavior that has happened within the last 3-5 years I would say that is a pattern of behavior and there’s a strong chance that it will repeat with her rent check within a few months. That’s our experience!