Single guy, employed 4 years nearby, lots of connections in neighborhood, one cat.
Pros: Looking to rent long-term/indefinitely, doesn't plan to move as he wants to be in this neighborhood. He has been at his current residence for two years and said he would stay if it was in this neighborhood. Good income. From a local family, grounded in area. Seems quiet and low maintenance.
Cons: Credit issues, most from about 4-5 years ago. Recent bills have been paid but a few are paid 30-60 days late according to credit report. Says he can have his sister co-sign if needed.
Young professional couple, employed at university, thinking about getting a small dog.
Pros: Stable employment, good credit.
Cons: Plan to move out of area in 1-2 years.
Who would you pick? The no issue couple who will be moving on in a year or two? Or the getting-his-credit-fixed but stably employed guy who might stick around for a long time preventing turnover costs?
You can't guarantee someone will stay in your house long term.
I have also had tenants stay 5 years who only had intentions on staying a couple of years.
Candidate 1 is a risk, Candidate 2 is not.
Hi @John Underwood , thanks for your input! That's a good point. The recent late payments are a concern.
As a mitigating factor, would you consider Candidate 1 if they paid an extra month of rent up front, or some other financial commitment?
To prevent discrimination claims you should always take the best applicant. If I didn't have a better applicant I would charge a larger deposit or deposit, 1st and last months rent.
However your applicant #2 is the clear choice. Try and take emotion out of it and pick the best applicant available.
I’d vote candidates #2
@Tandi H. #2
Thank you @Brian Hamel @Dennis M. , and @John Underwood ...sounds like there is agreement to go with the better credit applicants. I was swayed by the possible lack of tenant turnover with Candidate #1, but you are right, who knows if they will really stay long term or not. I did ask them about their rent payments, they said they paid late once a year and a half ago, due to their payroll error...not great to hear that they are cutting things that close.
To keep things simple Candidate #2 sounds pretty clean. But prepare for tenant replacement & unit turnover within the 1-2 year.
Candidate #1 doesn't seem too bad... no ones perfect. I would ensure my lease agreement is strong and consider collection of a 2nd months rent. But make sure there are no other redflags!
Don't get "teased" by the I love this neighborhood & want to stay here for a while punchline. They can both leave when their lease agreement expires...or ask for a renewal.
@Tandi H. I would not choose a single guy who can’t pay his bills. He plans on staying for five years? He can’t even plan on making a credit card payment on time...
If your worried about turn over do a video tour and get good pictures so when the couple gives you a 30 day notice you can turn over the place quickly and maybe for more to cover your cost/meet the rental market price
It isn't going to matter how much you lose on the turnover with tenant number two if you end up spending money and time chasing tenant number one and then eventually have to evict him.
Cats will pee everywhere too...
Originally posted by @Tandi H. :
Thank you @Brian Hamel @Dennis M., and @John Underwood ...sounds like there is agreement to go with the better credit applicants. I was swayed by the possible lack of tenant turnover with Candidate #1, but you are right, who knows if they will really stay long term or not. I did ask them about their rent payments, they said they paid late once a year and a half ago, due to their payroll error...not great to hear that they are cutting things that close.
“ They say” is the biggest liar
Go with what you actually know
Agreed. This process should be about verifiable facts and avoiding red flags. If they meet your requirements it should be easy to prove on paper. Red flags if everything looks good on paper but you suspect something is very wrong with it. You are sort of approaching it backwards and using your judgment to justify bad terms on Paper. It just means you are a good person, but it will likely burn you.
@Tandi H. I would recommend calling both applicants current and former landlords before making a final choice. You can’t take either applicant’s word for it that they pay on time and have not damaged their current or previous homes.
If the second applicants have a good landlord reference I would go with them. If the first tenant only had credit problems five years ago that would be fine. But you mentioned that he has recent late payments so he is overextending himself if he can’t even pay the minimum on his current bills.
Candidate 2 is clearly the better candidate. It sounds like it is a very nice neighborhood, which means if the young couple does move in 1-2 years you should have no trouble renting it out again. And maybe candidate 1 has cleared up his late payments in 1-2 years and ends up being your tenant then.
@Tandi H. Follow your screening policy. Be consistent across the board.
My vote is #2. I always go with whoever is most responsible and can make payments on time versus how long they plan to stay. Rather not have to deal with collecting late rents or have to evict.
Thanks everyone for the overwhelming responses in favor of #2 - makes my decision a lot easier! Especially the points about sticking with a screening policy to avoid any issues of discrimination. I wouldn't want to get into any legal issue.
This community is so helpful, much appreciated!!
@Tandi H. Tenant screening is very important in this scenario - if the couple has stable jobs as well as good credit and no criminal background - those are all positive qualities! Also, if you like them and think they'd be a good fit for you and your property then they sound like a great option. If you live near a university, then marketing would be pretty easy for your property and you shouldn't be too worried about filling the vacancy after a couple of years! Universities employ lots of people and are hot spots for property investing. Anyways, best of luck! Going with your gut is always a good thing too.
You've already gotten an answer. I'd also consider the additional income you can get from potential pet rent. Make sure you get a pet deposit to cover any pet damage.
The idea of using the next 1-2 years to plan marketing should apply in all scenarios. Make sure you get a great video tour and a good amount of photos so that you can market the unit with more ease (as a previous answer pointed out) when the time comes. Good luck!