Tenants have no bank accounts

26 Replies

I have a rental i just put on the market 5/2/1 2000 sq ft. It's the first time I am encountering applicants with very low credit scores, several children, and no bank accounts. 2 divorced women, 6 kids, no alimony, very brief rental history. Just wondering if this home is a bit too much for them, it rents for $1900 and I have a few other applicants more qualified. The one who has 4 kids from 2 men has part time minimum wage job and could disappear and I would never be able to collect, as she has nothing. The other woman's ex husband doesnt work so she has no income from him. They have no savings. Appreciate your comments. Wondering if I should return the application fee and move on.

Pass. Not sure what your rental criteria are, but these applicants don’t sound good at all. Honestly, your one sentence alone that says “I have a few other applicants more qualified” should make you want to pass. Why would you even consider taking these LESS qualified applicants?

I would never use a PM, but I think you really need one. You've posted several things that by themselves are no's, but you're soliciting reasons to accept them? Get an objective professional to screen your rental.

Do you have a minimum income requirement? I do 3x rent in income so they'd need $5700/month in income to meet my requriements. if the rent is from multiple parties I require 4x rent.  I would return fee and move on. You should establish written criteria so if you are ever challenged in a fair housing complaint , your decisions are defensible

Tenants without bank accounts are a no no.  I don't care what they look like on paper.  How on earth do you expect to sue for restitution judgement recovery if you have to, and there's nothing to attach?  If they're driving a nice car, ask yourself what's wrong with this picture.  If they're driving a beater, ask yourself what's wrong with you.

I was informed when I first started that cash tenants are bad news, and all these years later no one has been able to tell me their success story with one.

Sounds like you need to work on developing your rental criteria; for example, requiring all approved applicants to meet a minimum credit score, income amount and provide rental references for both previous and current landlords. Post criteria in your marketing ad to all potential applicants. Doing so will let everyone who applies know you are a professional and the deadbeat and hard luck applicants will weed themselves out. If you must  veer from these requirements for an applicant, such as if one of the criteria items is weak ( no or little credit history) make sure the applicant is very strong in the other two areas such as income and rental history. If the applicant is weak on income, you'll want to pass.

Good luck!

These are all great responses. The applicant answered my questions on the phone and i waited to find out the rest when she filled out the application, which then, didnt conform to my requirements at all. Also i dont appreciate the lecturing, preaching, and finger pointing. I have a lovely portfolio of SFR's with long term tenants and more than enough time in the trenches. I will be returning the fees and when she asks why it will be "your financial situation is unacceptable" or somesuch. BTW i dont believe they will stop getting pregnant but i certianly wont even go near that topic.

I'm so lucky that i don't own a boiler! After reading amy's post about the PEST. 

Like you, I screen heavily on phone call, and then again showing.  I only provide applications to those that meet my criteria.  I do no charge an application fee, so I simply say I selected someone else. End of story.

Just want to state that a lot of the info you gave is illegal to use as screening criteria - i am sure you know this but others might not 

It is none of your business who the fathers are, what the x does (unless he is being screened) or any other familial issue. 

Be aware that HUD does call ads looking for LLs to ask illegal questions and then file complaints.

If you have criteria screen to that and dont set yourself up to be sued for discrimination 

Nope I would pass.  No bank accounts, low credit scores.  Those are all giant red flags.  Go with your other qualified candidates.

@Jane S.

Hi Jane! I can imagine the area of concern with your property. We have an investment property that HUD supplements the rental income. The tenants had low credit score and other red flags, but we were sympathetic to their needs and gave them a chance and have been amazing tenants. We also have another property, in which, there is no bank accounts and decent credit that we rent out. That family as well has been amazing for us. Every tenant has a unique situation it really up to you on what your "RISK FACTOR." At some point, we are going to scale up and higher PMs in order to alleviate us from this step in the future. Wish you the best.

@Jane S. The amount of discriminatory information you are considering is scary. You should pass on them based on other applications being more qualified - mind you, your criteria for determining what “more qualified” is can’t be discriminatory either. Please find yourself a property manager and/or read up on fair housing laws.

Well this not so weird or scary at all in fact In a low income areas almost no one has bank accounts . I think I have like three tenants that actually do and have no issues with those that don’t . Some folks simply don’t trust banks or had divorces or fraud so they prefer cash money orders or other forms of transfer

Originally posted by @Dennis M. :

Well this not so weird or scary at all in fact In a low income areas almost no one has bank accounts . I think I have like three tenants that actually do and have no issues with those that don’t . Some folks simply don’t trust banks or had divorces or fraud so they prefer cash money orders or other forms of transfer

In most of my properties I'd lose more than half my tenants if I required bank accounts. Most get paid on pre-paid debit cards but not very many pre-paid cards work with ACH debit for online rent pyments. Fortunately, Buildium now has paynerme so my tenants can pay cash at CVS or 7-11 AND NO CHARGE BACKS but all the accounting entries are still done automatically. YAY

 

Returned the fees for background verification to the women. they didnt seem to care. was tempted to put a family planning brochure in the envelope but didn't. Rented to a retired air force officer with 2 kids & divorced. Has a nice income from various military bens and best of all he is not a non person and will fix minor things that occur. thanks again for all your ideas. I put in the ad that a local bank account with a min. balance is required. Dont want to fuss with a personal check for the rent. Its a non issue anyway since i like this guy and wont be buying anything until 2nd quarter 2020, and all my tenants are staying.

@jane S. I *strongly* suggest you get educated on fair housing law. You are wide open for being sued for discrimination. This is no joke. Find a local rental owners assocation and go to a landlord bootcamp or read the tenant landlord law that pertains to your locale. 

You have posted on a public forum that you are using discriminatory information to choose tenants. . 

Lots of would be coaches out there. I dont need a PM, FHA seminar, nd have never been called out for discriminating, plenty of others do that/

@Jane S.

Haha, i like you! I agree with you! I know you are not discriminating based on the intention of the HUD laws, BUT, these uptight HUD finger pointers in this thread are kind of right about you exposing yourself to liability.

FYI

The seven classes protected under the Federal Fair Housing Act are:

  • Color.
  • Disability.
  • Familial Status (i.e., having children under 18 in a household, including pregnant women)
  • National Origin.
  • Race.
  • Religion.
  • Sex.(gender)

Your posts mentioned familial status and gender. Even though technically you did not need to mention either one, in order to reject them on financial grounds, which is totally legitimate. Also, I'm not sure you even put much weight on familial status and gender, other than the relationship to financial inability.

I think they are just trying to give you a "heads up" about potential hazards of a HUD lawsuit and the best way to avoid one. It's the new world of political correctness, so as long as you don't speak bad words, you can't get in trouble for making factual statements. Remember that despite your true intentions, once you utter the bad words, you are guilty.

Best of luck!

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here