When to make an Exception for a potential renter

Question

We are showing our first rental property today and have had a lot of really positive responses from potential renters.

We had one Hispanic family that came to view the house and they really liked it and have already applied through Cozy.

I’m trying not to let my soft side get in the way of good business sense and hoping for some guidance on this.

The father of the family has newly acquired an SSN so he has limited credit history. In fact, he only had one inquiry on his credit report.

His income is very good, and all around I got a really good gut feeling about them.

The thing that gave me pause is that his wife is obviously not legal as she doesn’t have a SSN and his brother would likely be living with them as he is apparently on his way here from Honduras, also wont have a SSN.

Our policy is that anyone 18+ living at the house is on the lease and has completed the background check and obviously these other 2 adults won’t be able to do that.

Should we scratch them off the list and move on to the next one (assuming more folks apply; these are the only ones so far), or is there a scenario where you would move forward with this family?

Thanks in advance for your guidance.

Costin I. · Answer

@Jon Mason You should have a clear renting criteria and follow it, not qualify people on gut feelings. Some of the "nicest" people and smooth talkers are the worst tenants once they secured the house.

If the only one (!) with a SSN has limited credit history, that means he almost has no history - so you can't really judge based on that. Does he have any tax returns? Bank statements showing history of income? And do they qualify on the income criteria?

That being said, money is the great equalizer and understood by everyone in all languages. Meaning, the deposits should reflect the associated risk you are willing to accept. Do you have something like this in your rental criteria:

Dealing with Multiple Applicants (roommates):a) No more than three unrelated roommates allowed. This may be different for different properties.b) We will consider combining up to three gross monthly incomes if it meets or exceeds 4x monthly rent amount.c) Deposits will be assessed based on the average FICO score of all adults. To determine the number for the approval or disapproval add the credit scores together and divide by number of applicants to arrive at the average.Examples: Applicant 1 has a score of 600 and Applicant 2 has a score of 560. Gross Score: 1160.Divided by Two = 580 average score, which would require additional deposit of 50% and a $375.00 risk mitigation fee.d) If there are 3 or more roommates double deposit is required along with the appropriate risk mitigation fee based on the average credit score.e) Tenants are responsible for the lease in its entirety, not just a portion.

Do you have Contingent Approval Fees ? Credit score based ? Like...

Credit scores of 620 or higher are usually approved with normal deposits as listed in the ads. Property Management can offer applicants with lower than 620 credit scores an opportunity to rent our properties by offsetting the monetary risk for the owner and the management company in the form of increased deposits and fees.Applicants with lower than a combined 620 FICO score will be subject to a Risk Mitigation Charge as outlined below tooffset the increased risk.Risk Mitigation Deposit Increases for Applicants:

Average Credit Score (all Adults)

Deposit Due

600 - 619

Additional 25% deposit and $250.00 risk mitigation fee.

575 - 599

Additional 50% deposit and $375.00 risk mitigation fee.

550 - 574

Additional 75% deposit and $500.00 risk mitigation fee.

549 and below

Denial

Offering an approval based upon low credit score or negative qualifying factors comes with additional risk to the landlord and property manager. As customary in rental industry, an approval can be offered to tenants with less than perfect qualifications if they can pay an additional fee associated with their credit scores to offset the risk posed.

Foreclosure

Double security deposit

Dismissed Bankruptcy

Double security deposit

More than 50% negative credit

Double security deposit

50/50 positive-negative credit

1 and 1/2 security deposit

Good credit / good rental history

Single security deposit

Good credit / no rental history

Double security deposit

No credit / no rental history

Double security deposit

3 or more roommates

Double security deposit

Broken lease

12

th

month rent prepay

If Applicant(s) are deficient in two of the 6 areas above, approval MAY be granted with a larger security deposit and/or prepaid rent or a lease guarantor (except for automatic denial criteria as specified above). Applicants with deficiencies in 3 or more areas usually cannot be approved. Property Management reserves the right to reject any application due to any one or a combination ofthe following:

• False, incomplete or insufficient application information;

• Credit score 550 or less,

• Credit showing delinquent accounts with collection balances due; foreclosures, bankruptcies, liens againstthe applicant for taxes or child support, judgments against the applicant for evictions or property damage;

• Rental histories showing excessive late payment, NSF checks, property damage, lease violations;

• Income shortages less than the required monthly amount;

• Criminal histories showing felonies, misdemeanors, DWIs, DUIs, theft by check, domestic violence

Having something like this will help you eliminate "gut feeling" criteria and ensure you are treating all to the same standards of qualification. Good luck!

Dennis M. · Answer

You don’t want to knowingly accept an illegal alien on the lease . you could be held liable for that and punished . Is it really worth the anxiety and fear of knowing you’ll be implicated for a potential crime by ICE agency

Patricia Steiner · Answer

They sound like a lovely family - who do not meet your tenant qualifications. And, you have those for a reason - a business reason. Every time one of my clients/I make an exception, it's the exception that becomes that "no good deed goes unpunished" thing. This is business, and as such, sticking to the business model/criteria is the way to go.

Hope this helps...

Jon Mason · Answer

This is all really good feedback guys, thank you!  After reading your posts and sleeping on it, I agree that this would not be the right move and we’ll be denying this applicant in favor of one of the other more qualified applicants that I’m sure we’ll be getting.

Thanks again!

Doug Pintarch · Answer

No.

No exceptions.  Not for friends, not for family, not for declawed kitty cats you find behind the convenience store who have the lonleliest eyes...

Nobody.

When to make an Exception for a potential renter

Most Popular Reply