Should I consider tenet application with low credit and eviction

Rental Property Investor · San Antonio, TX · Member since 2018 · 11 posts · 7 votes

Hello Everyone,

I own duplex property in the Austin Tx area. yesterday I have received my first application with a low score. Property has been listed for 15 days. few highlights

person 1: score 402
Accounts Ever Late: 3
Time Since Late: A month
Collections Accounts: 10
Civil Search: consider
EVICTION RECORD: file date - Aug 8, 2014
EVICTION RECORD: file date - May 27, 2015

person 2: score 551
Accounts Ever Late: 1
Time Since Late: All clear
Collections Accounts: 5

On the other side, they both combined making income 3 times the rent amount. Should I consider this application or just wait for the next one. Listing Link

Thanks,
Jignesh

0 Reply

128 views

Most Popular Reply

Mike McCarthy

Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes

@Jignesh Savaliya what!?! Is this a serious question?

I would never accept a tenant with a property eviction. When an eviction is processed, it means they didn’t pay, didn’t try to work it out with the landlord, and a judge had to kick them out.

As for credit score, there are a lot of people in the 500-600 range. Bad credit, but they could have been late a few times, and maybe are trying to get out of it. I’ve rented to people in the high 500’s because they were honest with their situation, and proved to me that they were on the upswing.

For a 4xx level score, I’d assume they just never pay their bills.

14 Reply

See this reply in the discussion

48 Replies

Jump to latestLatest

Sort by

Ethan Jacobsen
Property Manager · San Diego, CA · Member since 2020 · 45 posts · 37 votes
6y
I would avoid these applications at all costs. Those are some very low scores and there are a lot of collection accounts. Not to mention the evictions! I would encourage you to wait for someone better. Post it on Facebook Marketplace and try to put it on some FB groups that might be interested. Make sure you have it listed in as many places as possible. If you think lowering the price might attract more people, I would personally rather have a solid tenant for a little less each month than a sketchy tenant for my desired price.
8 Reply
Mike McCarthy
Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
@Jignesh Savaliya what!?! Is this a serious question?
I would never accept a tenant with a property eviction. When an eviction is processed, it means they didn’t pay, didn’t try to work it out with the landlord, and a judge had to kick them out.
As for credit score, there are a lot of people in the 500-600 range. Bad credit, but they could have been late a few times, and maybe are trying to get out of it. I’ve rented to people in the high 500’s because they were honest with their situation, and proved to me that they were on the upswing.
For a 4xx level score, I’d assume they just never pay their bills.
14 Reply
Daniel Kim
Rental Property Investor · Garden Grove, CA · Member since 2012 · 100 posts · 69 votes
6y
I would also pass. I've rented to tenants with low credit scores - some people just don't know the tricks to raising their credit score, have medical bills that they didn't know about until they were sent to collections, etc. etc. But evictions? Assuming their previous landlord maybe offered cash for keys or other remedies before eviction, that means they were the kind of tenant who fought their landlord/court all the way to the end...
4 Reply
Jignesh Savaliya
OP
Rental Property Investor · San Antonio, TX · Member since 2018 · 11 posts · 7 votes
6y
I asked this question because the last eviction date is May 27, 2015, which is 5 years from now, and honestly this is my first application with eviction. So I wanted to validate my understanding and see what other landlords are thinking on the same

Thanks for your input @Mike McCarthy and @Ethan Jacobsen
I will not accept this applicant

0 Reply
Anna Sagatelova
Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes
6y
@Jignesh Savaliya if your criteria is "no evictions", you should stick to it. If you want to make your criteria "no evictions in the past 5 years" then that would be different. In your market, it sounds like there is no need to qualify "no evictions" with a time period. In some markets, it would make more sense to do so. Whatever you choose, set your criteria IN STONE before you even begin to advertise a property. Then it's a simple yes/no as to each criteria point.
3 Reply
Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
6y
@Jignesh Savaliya haven’t read the rest of the comments yet but I bet they all are some version of “are you insane????”
5 Reply
David Wandel
Real estate investor · Pasadena, MD · Member since 2016 · 165 posts · 258 votes
6y
Depends. If this is a A,B,or C class property they would be a pass. If it is a D class property I would look more into their story and check into their employment history before making a decision.
3 Reply
Mark Waldrip
Investor · Oklahoma City, OK · Member since 2015 · 48 posts · 86 votes
6y
No evictions or convictions! haha
1 Reply
Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
6y
@Jignesh Savaliya As others have already stated, you should pass on these applicants. You'd be much better off leaving your property vacant than filling it with these two.

In looking at your post, and your rental ad that you linked to, it doesn't appear that you have any established rental criteria. I'd highly suggest you establish some. Things like 3x the monthly rental amount in income, a minimum credit
score (if you want that), no prior evictions, favorable prior landlord references, or whatever criteria you decide you want your applicants (and future tenants) to have. I don't allow any prior evictions, but you have to come up with criteria that works for you.

Regardless of what criteria you come up with, make it available for your applicants to see so they know what it is before they even apply, and then stick to it. That'll take the guess work out of it when you receive applications and make decisions like this so much easier because applicants will either meet your criteria or they won't.
3 Reply
Aaron Gordy
Real Estate Broker · Austin, TX · Member since 2012 · 1k+ posts · 1k+ votes
6y
@Jignesh Savaliya I would concur with the rest of the folks here. Even though those evictions happened a very long time ago, I would pass. Their credit scores are too low and the time since late with applicant 1 is a month. That is too risky,imo. But I do know of big landlords who would work with such folks but the risk has to be decreased considerably by cash down such as the entire lease paid up front. I would pass as there are too many good tenants to choose from in the Austin metro.
0 Reply
Percy Matsunaga
Flipper/Rehabber · Sacramento, CA · Member since 2016 · 282 posts · 85 votes
6y
@Jignesh Savaliya
Wow!! Definitely run away from those! They are just going to be problems for you in the future.
1 Reply
Rhondalette W.
Dallas, TX · Member since 2014 · 517 posts · 106 votes
6y
@Jignesh Savaliya Hi there. I would accept low credit score but not an eviction. The eviction means that another landlord had to file and go to court to get that tenant out of the property after they did not pay their rent. The best way to predict future behavior is to look at past behaviors. Do you want the headache of evicting someone? 15 days is not a long time. I would wait for a more suitable tenant. Also, I usually list “no previous evictions” in my advertisements. How are you advertising?
3 Reply
Karen F.
Investor · San Diego, CA · Member since 2015 · 435 posts · 421 votes
6y
Far, far better to let your properties sit vacant than to accept tenants like these. No evictions, no matter what their "reason" was. A history of whether they paid their previous landlords is the most important thing.
1 Reply
Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
6y
Will you get better applicants if you wait? You say you've been on the market for two weeks and that's the first application-- are you priced high for the neighborhood?

Do you normally do low income properties? If you don't have a plan for dealing with this type of tenant and it's not what you usually do, you should probably pass.

I have a bunch of tenants with crappy credit that are perfectly good tenants. I have one couple that had 400 level credit scores and one prior evicition and they've paid me every month for almost 4 years-- note that I didn't say paid me "on-time" but then I don't really care so long as the notify me in a timely way, have an acceptable plan (where they are caught up before the end of the month) , and then they pay as agreed on the plan.

I'll listen to the story if an applicant has only one eviction and evaluate on a case by case basis.

2 Reply
Dan Naumowicz
Real Estate Agent · Elk Grove Village, IL · Member since 2014 · 45 posts · 14 votes
6y
@Jignesh Savaliya only if you want to have problems in your business.
1 Reply
Jignesh Savaliya
OP
Rental Property Investor · San Antonio, TX · Member since 2018 · 11 posts · 7 votes
6y
I have updated my listing with all criteria that I am looking for. For this applicant, I have verbally explained to them.
Thank you for your inputs @Rhondalette W.
Great advice @Kyle J.
0 Reply
Matt Carey
Investor · Brandon, FL · Member since 2017 · 178 posts · 67 votes
6y
@Jignesh Savaliya pass. Easy decision
0 Reply
Danny Webber
Real Estate Broker · Austin, TX · Member since 2016 · 834 posts · 449 votes
6y
Hard pass unless they can do many months of prepaid rent and sec deposit. rents should be the last part of lease not the first part so they still need to pay monthly up front.
0 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
@Jignesh Savaliya anything under 500 is a horrible. I have never seen someone as low as 402. The evictions are a sign of disrespect and negligence. There is two different things you screen for when paying rent:
1. Ability to pay rent, which is income, work history, etc.
2. Responsible to pay rent, which is payment history (credit report), landlord references, eviction history.
These two things are not the same. Just because someone has money doesn't mean they will pay rent and even people without money will find a way to pay.
I would also ask, did they give landlord references, two each and did you call them? Did you call their employer and see their pay stubs to verify income? I wouldn't bother in this case because the credit report is a hard pass. No amount of extra deposit or rent would give me reason to accept them.
My advice is spend some time learning how to screen people or hire a professional property manager to do it for you. Bad screening is the number one reason for problems in rental properties. This is literally the most important thing you do as a landlord.
Here is a good reference chart.:
1 Reply
Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
6y
@Joe Splitrock My thinking on evictions has evolved-- I do think that usually evictions are a sign of disrespect, but not always. I've seen multiple applicants in different situations where they had an eviction and it was really more of a lack of understanding of the rules and the process. One was a college roommate situation and he wasn't even aware of the eviction. One of the everybody on the lease and one kid screwed them all. I've seen couch surfers that were paying get named; I personally know one awful, unethical landlord that filed for spite after the tenants moved out. I've had tenants tell me they have an eviction because they once got a 3-day notice (when they actually moved and were not evicted). The vast majority of tenants don't know the terminology or understand the rules-- especially the ones that normally do the right thing. I've seen enough exceptions that I'm now willing to hear the story.

3 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
I don't know how much the rent is, but the fact that the last eviction is only 5 years ago (they were evicted TWICE), they have 10 things in collections and they were late last month on a payment...too many things. Since their eviction, they had time to get their finances in order and haven't (or they wouldn't have had a late payment last month). If rent is $500 a month (no idea what your rent is), for a couple to have an income 3x times that doesn't take much to do.
0 Reply
Jon Shoop
Property Manager · Dallas, TX · Member since 2020 · 109 posts · 79 votes
6y
@Jignesh Savaliya
It's not the low credit scores that should be the giant red flag. Its the evictions that should. To go through an eviction process is time consuming and expensive. Tenants with prior evictions should be avoided at all times.
Our PM firm goes through dozens of apps a day. We don't mind credit scores nearly as much as evictions and property history. Our screening process dives deep to find the truth out with an applicant's prior rental history.
Who's to say they aren't just going to stiff you and force you to evict them in 6 months? Not worth the hassle or stress. Be patient and you'll get some better apps in.
2 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
Originally posted by @Jill F.:
@Joe Splitrock My thinking on evictions has evolved-- I do think that usually evictions are a sign of disrespect, but not always. I've seen multiple applicants in different situations where they had an eviction and it was really more of a lack of understanding of the rules and the process. One was a college roommate situation and he wasn't even aware of the eviction. One of the everybody on the lease and one kid screwed them all. I've seen couch surfers that were paying get named; I personally know one awful, unethical landlord that filed for spite after the tenants moved out. I've had tenants tell me they have an eviction because they once got a 3-day notice (when they actually moved and were not evicted). The vast majority of tenants don't know the terminology or understand the rules-- especially the ones that normally do the right thing. I've seen enough exceptions that I'm now willing to hear the story.

Everyone who gets evicted has a story explaining why it isn't their fault. I don't know how you determine who is telling the truth? The worst people are usually the best liars. Early on in my landlord career, I used to buy into the stories. I found over time that they were mostly all lies and in the end I got screwed for trying to give someone a chance.

You are right, some people say they were evicted, when in reality they were served notice to vacate. An eviction only happens if they refused to leave and it went to court. An eviction search will reveal this. Still they were asked to leave, which means they were not doing the right thing - they were either violating a lease or not paying rent.
As far as filing for spite, the tenant should have gone to court and told the judge they already left the property. They likely didn't show up in court and the landlord got a default judgement. Most likely they owed the landlord money which is why the landlord proceeded with the eviction to get the judgement.
What is even scarier is that so many landlords are doing cash for keys now, so who knows how many other times they were asked to leave and it doesn't even show as an eviction. It is just too much risk for me.
2 Reply
Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
6y
@Joe Splitrock You are absolutely right, it is a risk-- I know, everyone in prison is innocent too. But I've had good luck so far. Right now 10% of my tenants have a previous eviction-- Some I chose and some I inherited and I know eventually someone will eventually screw me but... so far, so far 4 years, 1.5 years, 3 years, one moved (and left the place nice) after 1.5 years). And I'm about to rent to a 4th year engineering student that has a prior eviction now.
Yes that tenant should have gone to court; but she would have been up against a scumbag landlord with deep pockets and she was 8.5 months pregnant at the time. Sometimes you just can't do it. And I make judgement calls deciding who to believe. I'm sure I get it wrong and turn away and applicant that wasn't at fault and maybe next time I'll get it wrong and they screw me. Oh well.

1 Reply
Linda S.
Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
6y
@Jignesh Savaliya,
The first 1-- absolutely a hard pass, they were just late on a bill!
The 2nd one-- look at their credit report, and understand what happened? My first guess is medical bills. Did they have 1 card and max it out? so many people don't understand credit, and how it works. How stable is their job? We always say-- we place most emphasis on income, because at the end of the day-- that's what is paying rent!
If you stated your requirements, and they don't meet them-- wait. Remember, 20% of your tenants will make 80% of your stress, so chose very, very wisely! Trust your gut!
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.