How to handle a overqualified tenant ?

10 Replies

I currently have a prospective tenant who applied to live in the unit above us who is overqualified. They currently own in NJ and are planning to keep that home and rent it out. The husband makes $140K/year as a software engineer and his wife is going to become a resident MD at a hospital near by and is going to make $60K a year. They have one young child. They look perfect on paper, but I just don't see them staying long. This isn't a neighborhood with a bunch of software engineers and doctors walking around. To be honest, this is probably one of the worst blocks in the neighborhood. Although, a pretty solid neighborhood all around. I'd like for them to stay at least two years, but I can see them jetting after one.

Fortunately, during these times, we have another good option but just wanted to get your opinion on overqualified tenants.

@Luis Rodriguez

Its up to that person to decide if where they want to live is suitable or not. If they want to rent your place, then they should as long as everything checks out. However you should at least be upfront, tell them about the neighborhood and let them decide. Transparency seems to be the best option.

Why does it matter to you? Rent to them. If you're worried about them breaking the lease early, make sure you have a solid process for early termination that compensates you for the trouble.

I rented one of my worst apartments to a retired couple in their 60s. I manage two nice rentals for them and I helped them buy a two-year-old house. They retired and wanted to move here but had to wait six months for their renter to move out. So they rented my crappiest apartment and put their stuff in storage. They sacrificed, saved up some money, and then used the savings to help pay for an expansion when they moved into their new home. They were over-qualified but they were great renters and had a reason for going cheap.

Maybe they're more comfortable living there knowing you live there too? Good news is that you will have a strong tenant for at least one year. Overqualified tenants have a higher likelihood of taking care of your property, so turnover costs should be low. The rental situation in 1 year should be stronger than it is today... Rent to them and they may surprise you and stay longer! 

They are prioritizing living closer to the spouses job where she will be working long hours and a commute would be a drain for her. Living in a little bit of a less than desirable neighborhood allows them to save money on rent (while they are still paying the other mortgage). This actually makes sense to me for them to think this way. 

I'd rather have a better tenant who I know I am going to get the rent from for a year, as opposed to having someone locked in for multiple years where I am holding my breath every month wondering if they will be able to pay. Approve them before they move on to another place. 

Have you considered asking for a 2 year lease, since that's the minimum you really want? It can be risky - they may not be so perfect after all, and you'll only find out after they move in - but you can at least have the conversation saying you are really looking for someone longer term.

If not, there is absolutely no guarantee that any other tenant will stay more than your lease term states, anyway. If you have a 12 month lease, that's all you can expect at the time.

Because they qualify, regardless of whether or not you feel they are overqualified, the choice to live in that area is up to them. You are trying to predict whether or not they will be long term or short term tenant because of over qualifying when in reality they will be there for at least the length of the lease. Nobody can predict the future. Any tenant may move out at the end of a lease or continue to renew. Be very careful of violating Fair Housing Laws.

First option on my application is lease term requested 1 or 2 years, and states 2-yr lease preferred, and another question again near end of application asking how long they plan to stay 1 yr, 2-3 years, 3+ , to get a better idea of potential turnover. When we moved to a new state for my husband's work, we also rented way below qualifications as we planned to research the area and buy something we could turn into investment property when we left, but we rented short-term in an apartment complex, didn't bother a single-family landlord. For those who let me know they're looking to buy soon or you can tell they aren't looking for a long-term situation, I let them know I prefer longer-term lease and direct them to local complexes offering shorter-term leases.  Turnovers are a pain.   

@Luis Rodriguez . I would take them. Even if they do leave in a year, hopefully the economy will be a lot better then and you can find another good tenant at that point. And residency is typically three years from what I understand so you may end up keeping them for longer than you expect.

@Luis Rodriguez we have a successful eye doctor tenant living in one of our units in a C neighborhood. At first we thought “why does he want to live here?” But he was too good to turn down. He’s been an amazing tenant for over a year now. Don’t overthink it!

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