I've been told that some people will charge first AND last month's rent (in addition to deposit) for higher risk tenant. For example I have one now that has terrible credit but they are blaming their ex-spouse for the bad credit and claim to be on track, make good money, etc.
Say for example I collect first and last month's rent at move-in and they eventually get behind on rent.... Say it's the 15th of month 5 and they haven't paid. How do I leverage that last month rent? I certainly don't want to just apply that to the 5th month and then just start chasing them for month 6. Can I still serve Pay or Quit notice and start the process on Month 5 day 15 even though I have that extra month in "reserve"?
Other things you've done to accept a higher risk tenant?
@Lyndal McMurphy You'll have to check with your state laws on what is allowed buy we will typically require a double security deposit on applicants that have iffy credit. Often times most are okay with that and pay it.
I've allowed a tenant who said credit issues were due to a bad divorce and losing house during the process, but I required a qualified co-signer and a larger security deposit (our state allows up to 2 months). It's worked out well so far, about 1.5 years and so far a very good tenant.
Ok maybe that is what I should focus on... charging a double security deposit instead of calling it last month's rent. Thanks for the feedback!