Flipper/Rehabber · Colorado Springs, CO · Member since 2016 · 502 posts · 167 votes
I was impressed with my sales ability when the candidates for renting my property volunteered to pay 12 months in advance.
Then I was scared when my broker said its a BIG red flag cuz they might want to turn the house into a marijuana grow house.
Has anyone out there had experience with this? They are 3 adults, early 60's, employed, 2 sisters and one sister's husband who looks like ZZ Top ... the house is actually too small for growing weed inside, but has a huge yard but totally exposed on a corner lot, so i dont think that would work. I should add to the lease, "no greenhouses in the yard .." etc. They said nothing about the former tenant's crappy paint repairs and light bulb theft, etc.
Because they were paying up front i thought I could skip the background report but I guess NOT!
Now I have to learn the various names are for growing weed plants in a protective structure ...
Tenant paid a year in advance all cash plus first and last months. My PM said everything looked
Great on paper. Both husband and wife worked.
They made good money...
After one year, they wanted to renew. I wanted a home inspection done so we set it up...
When I walked in with my Property manager we smelled something funny. ( This is an upscale
Area btw.. rent was $4500/month 3000 sq ft home with huge pool and breathtaking view that allows
You to capture Disneyland fireworks nightly.)
I noted it and continued on. We went through the house and everything seems fine.
We eventually went to the backyard and I noticed the pool was empty. NOTED.
He mentioned that it was failing so he had it drained so He could fix the leak.( he owns a pool company so he said ) I thought it was strange and asked why he didn’t report it, he said it just happened recently and he didn’t want us to stress about it and would
Take care of it himself.
So after the inspection, I walked out to my car.
A neighbor walks over and asked me if I owned the home which I replied yes. She stated that he was growing 50-75 plants in my pool at a time and had recently had it removed. I was in disbelief.
Long story short, we didn’t renew the lease. He made it difficult and didn’t want to move out threatening us with all sorts of bs. In the end I had to do a cash for keys deal just to claim my property back. Lawyer said it would be a long process due to tenant rights ha.
After the cash for keys deal.. ($5000 fml)
I end up doing a more detailed inspection and found that the pool was rewired and drilled with holes to run his operation..
In total the repairs of the whole house is costing me 50k..
That 50k is a huge lesson I learned. To be honest I even suspect my old property manager was in on this.
Good times! Ha never again. So yeah if it’s too good to be true it normally is...
@Jane S. anyone wanting to pay a year in advance to me is a giant very red flag. Tenants know LL love money so by offering lots it throws them off. LL won't screen as hard, or at all. Then they cook meth in the house or some other unwanted thing. Anyone that needs to move in tmrw, is buying all new furniture, has no rental history because they just sold their house, wants to pay in advance etc etc. I have heard them all! LOL
That is exactly what happened to our rental. Started a grow op. Modified the hvac, changed the locks. Would not let management company in at six month mark. Threatened with eviction they fled (with their hardware) and we had to put hvac back together.
Good other comments, but I’ve heard some states/localities don’t allow that much of an up-front rent payment. I heard professional tenants will offer it to get into a place then report the illegality, forcing the LL to give 11 months back and then they stop paying rent. Not sure on accuracy, but something to look into.
i have personally never had that offer when it wasn't to compensate for some sort of red flag, ie: past evictions, felony conviction, sex offender, drug dealer, or prostitution/porn
@Jane S. I would definitely do a background check.
However, I personally know of people in my local area that pay a year in advance. In my case it’s because he is a businessman with his family and parents. He paid for two rental properties in advance. He did that because it’s one less bill for him to take care of monthly. He has the money to do so while he waits for his house to be built.
I think you should definitely do a background check because it will atleast give you some background on who they are. Maybe include previous landlord references in that background check. On the other hand if they want to grow or do any drugs they can still do that while paying month to month-something to keep in mind. In any case I hope it all works well and I hope the best for you. I'd love to hear an update once you've decided on your next move!
I wanted to first say that the biggest problem with letting someone pay up front for a year, is that it's really hard to kick them out, if things go wrong. I highly suggest only using month to month agreements. We had tenants who had been living with month to month agreements for decades. A lease only really benefits the tenant, because you can't kick them out. But, if they want to break their lease, they'll find a way.
The only time I had a somewhat similar situation was with a young man who had been referred to me by a law student tenant of mine who met him in law school. I gave my law students $100 rent credit if they referred another law student to me who I ended up renting to. This guy, however, had decided to quit law school - but - he was a trust fund kid and proved he had a ton of money in the bank. He had decided to write music full-time, and promised me he would never play loud music in the apartment, etc. The girl referring him to me said he was a great guy. I was pretty new at being a manager.
The one thing that saved me from having him cause all of my good tenants to move out because of him having late night electric guitar jam sessions was that all I used was month to month agreements. After giving him several chances - and he really was a charmer - I finally had to give him notice to move, after promising my other tenants he was leaving so that they wouldn't leave.
I think it's best to just have a policy that you just never rent to anyone who wants to pay up front, somebody who doesn't have a monthly income that's verifiable. I, personally, many years later now, have never read a story by anyone who was happy they rented to someone who wanted to pay up front.
But, really, your best rules of thumb for minimizing problems are to use M2M agreements, and screen the stuffing out of every tenant.
Other than a grow, sometimes people rent a place with cash, then move other people into it. They might want to AirBnB it, even. But, you can pretty much bet that anyone offering cash for a year, is looking for an inexperienced landlord, so they can get away with something.
Tenant paid a year in advance all cash plus first and last months. My PM said everything looked
Great on paper. Both husband and wife worked.
They made good money...
After one year, they wanted to renew. I wanted a home inspection done so we set it up...
When I walked in with my Property manager we smelled something funny. ( This is an upscale
Area btw.. rent was $4500/month 3000 sq ft home with huge pool and breathtaking view that allows
You to capture Disneyland fireworks nightly.)
I noted it and continued on. We went through the house and everything seems fine.
We eventually went to the backyard and I noticed the pool was empty. NOTED.
He mentioned that it was failing so he had it drained so He could fix the leak.( he owns a pool company so he said ) I thought it was strange and asked why he didn’t report it, he said it just happened recently and he didn’t want us to stress about it and would
Take care of it himself.
So after the inspection, I walked out to my car.
A neighbor walks over and asked me if I owned the home which I replied yes. She stated that he was growing 50-75 plants in my pool at a time and had recently had it removed. I was in disbelief.
Long story short, we didn’t renew the lease. He made it difficult and didn’t want to move out threatening us with all sorts of bs. In the end I had to do a cash for keys deal just to claim my property back. Lawyer said it would be a long process due to tenant rights ha.
After the cash for keys deal.. ($5000 fml)
I end up doing a more detailed inspection and found that the pool was rewired and drilled with holes to run his operation..
In total the repairs of the whole house is costing me 50k..
That 50k is a huge lesson I learned. To be honest I even suspect my old property manager was in on this.
Good times! Ha never again. So yeah if it’s too good to be true it normally is...
I have dealt with this several times for numerous reasons usually its a spouse getting a divorce settlement.
Simply, request to verify the funds (bank account with redacted information such as account number).
Also, I provide a list of planned projects on the property. Gutter cleaning, furnance checks fire extinguishers, smoke alarms. For cashflow reasons this stuff is spaced out. Also it let's them know I am around.
Also I still run a background/credit check. Them paying in cash/upfront is just their method of payment.
Lastly payment has to be made with cashier check/wire. Basically use KYB(know your buyer) guidelines.
These small things hold up the transaction just enough criminals keep moving.
Also in my opinion you should run them as if they were anyone else. Have a process so you don't get yourself caught up in a legal mess. ie age discrimination, ZZ top discrimination. If they pass your process, consider them with the other prospects who do.
wow i guess the for rent sign goes back up. s**T! i could be ruined. Also i dont even want to ask what happens if i own a house where they are either growing or laundering cash. Plus, the health center where one of the women has worked for 21 years was first in the local news about virus deaths. They tried to paper it over by blaming it on the slowness of test results etc.
I was hoping the advance money would release me from due diligence but guess not.
I had another guy do this years ago before MJ was legal here and i knew immediately it was wacky.
Thank you all, cant believe all the mopes/skels out there ...
I've had people offer me this after they've gotten a big settlement from..... nuisance lawsuit against a former landlord! This is a huge red flag. Stable people with normal income don't do this. People with money and no income, no stability, for whatever reason, do. You'd have to factor in the eventual cost of an eviction for non-payment of rent, not to mention the repairs. If you had a clause regarding monthly inspections in the lease, it would discourage those who are looking for a site for illegal activity.
Everytime someone has asked this of us it didn't turn out well (usually something on their background report). So yes, I would say it's definitely a big red flag.
I would obviously thoroughly look into the tenant. But just to bring to your attention a different perspective I personally saved and paid one year rent when I was in my last year of nursing school. I am the only income for my family of 5 and I knew the last year I wouldn't be able to work due as much due to the course load. It was hard to save the money but it was such a weight off my shoulders that last year so I could put my focus to my studies. Best of luck.
@Jane S. Yes, definitely check them out. However, I’ll share that many years ago I paid my rent upfront for a year. I had just moved to a new city, and didn’t even have a job yet. The money was from the life insurance proceeds from my mother’s sudden passing. I explained it to them and they took a chance on me. In retrospect it’s the craziest story ever and I’m lucky they believed me. The leasing agent shared that she advocated for me (the leasing manager was afraid I was the girlfriend of a drug dealer 🙄). I will be forever grateful to them... and I found a great job 4 mos. later.
@Jane S.....Treat and conduct background checks as you would anyone else. It is a red flag but maybe they just don’t want rent to be an issue. I wouldn’t rule them out but I would think it through and conduct thorough checks on all the adults.
I have had people pay a year in advance, but I still always do a background check. If they are resistant to my doing it, then I know I probably don’t want to rent to them.
The money is not worth the hassle of a lousy tenant, and could cost you more in the long run.
Paying in advance this much takes a lot of landlords by surprise but it's not that uncommon. Certainly a background check should be conducted as you should on every adult that goings to be living in a property. Looking at it from another angle, what's the largest fear of most landlords? Not getting paid. If you get paid up front, that reduces that fear. Regular inspections to change HVAC filters, etc can take place to monitor the residence but just the advance rent alone wouldn't scare me off.
I have clients ask me this same question all the time. But if you do a proper screening, then taking rent up front is perfectly fine. 95% of evictions are for non payment. So you've now eliminated this for the next year. Any of the horror stories for tenants could have easily happened if someone paid monthly. If you have a strong lease, you can evict for any of those other reasons. So what is the difference?
The real question is, "should I rent to a less than qualified tenant if they pay 12 months in advance?" That is a different story.
All wonderful support from you im so glad i joined bigger. I am going to ask for 3 months bank statements in hard copy and i will use rentprep to do a b/g check. i already paid for a pretty thorough identity run on the husband of one of the sisters. Need to get employment info on him and wife. There is another person with same name who has florida warrants, i dont see where my candidate ever lived in FL but he did have a foreclosure in 2010 so did many here. Current LL praised them to the max and would keep renting to them if they didnt need the house back. I have access clause in lease as well as dont even think about changing locks (previous tenant did) what a creep, etc.
Even when I was working on the road and found places for my crew I paid monthly even though I could have paid in advance. It doesnt make sense to pay it all at once when I could use that money elsewhere.
I was impressed with my sales ability when the candidates for renting my property volunteered to pay 12 months in advance.
Then I was scared when my broker said its a BIG red flag cuz they might want to turn the house into a marijuana grow house.
Has anyone out there had experience with this? They are 3 adults, early 60's, employed, 2 sisters and one sister's husband who looks like ZZ Top ... the house is actually too small for growing weed inside, but has a huge yard but totally exposed on a corner lot, so i dont think that would work. I should add to the lease, "no greenhouses in the yard .." etc. They said nothing about the former tenant's crappy paint repairs and light bulb theft, etc.
Because they were paying up front i thought I could skip the background report but I guess NOT!
Now I have to learn the various names are for growing weed plants in a protective structure ...
appreciate any ideas.
It can be a red flag, but I have also had tenants pay in advance due to life circumstances. Do a full application with employment, credit and background check. It may not be weed. It could be criminal backgrounds or their income is coming from non-verifiable (illegal) sources. If they are self employed, ask to see last two years taxes and last two months bank accounts. If they are hiding something, asking for all these things usually scares them away.
Total red flag with these people. Do a background check if you still must even consider them. Both credit, tenant history and criminal background.
The law in that state allows them to consume and grow personal plants. This should't bother you. But they might be into other harder drugs. Since they are in their 60s, there should be a trail of history if they have been deviant.