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
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.
Real Estate Agent · Baltimore, MD · Member since 2014 · 113 posts · 71 votes
6y
The best predictor of future behavior is past behavior. Income is just one factor and to me a much smaller factor than credit. Credit is the willingness and ability to pay. Income is just the ability. I would pass on this applicant, unless second chance is part of your business model, which means you charge double deposits and slightly higher rents to make up for inevitable late rents
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
6y
I'm sorry, but if you have to even ask, think about, or consider these applicants for even a millisecond, you should not be a landlord. You should hire a PM to protect you from yourself.
Real Estate Agent · Baltimore, MD · Member since 2014 · 113 posts · 71 votes
6y
I think it is a joint application and still would be a hard pass. 400s is very bad and 500s well still pretty bad. Someone with a 500 credit score robs Peter to pay Paul. A person with a 400 credit score robs Peter, Paul, John, and Luke.
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!
Brooklyn, NY · Member since 2016 · 46 posts · 11 votes
6y
I’ve accepted a previously evicted tenant where It occurred 10 years prior, there was a logical explanation for it, he had the same job for many many years, exceptional references which were legitimate and state pays entire rent.
Real Estate Agent · Philadelphia, PA · Member since 2014 · 5 posts · 3 votes
6y
@Jignesh Savaliya
An Evictions by itself should never be the reason for the denial. It definitely is a red flag, though. I would let them know that I would need more information before I would even consider their application. In this situation, the eviction is 5 years old, it most likely indicate a tough patch in their life. You want to know if that rough patch is over. The credit score and number of outstanding delinquencies does tell you that their rough patch is still going on. Whenever, I send out my denial letters, I let the applicant know that their initial screen was negative and I looked at their whole situation to see if I could possibly overcome the initial denial. The eviction, low credit scores, and high number of outstanding delinquencies are just to much to justify the risk. My last point is that you are going to run into applicants that will not meet your initial screening criterion, but if they prove strong efforts to remedy what they did wrong in the past, you may find that you’ll have a great tenant. Just keep that in mind. I’ve rented to a good number of them and I’m in a luxury building.
Rental Property Investor · Auburn, ME · Member since 2015 · 236 posts · 140 votes
6y
This to me seems like a no brainer. Eviction? yes. Credit score? Low like really low, acceptable application? no. no need to look at more on this application, email no with link to report.
Investor · Richmond, VA · Member since 2016 · 164 posts · 114 votes
6y
I would not accept these applicants. I made the same mistake and haven't been paid since February. I was excited to list my first property I had fixed up, but it has been a disaster because I didn't take these types of background checks seriously. Learn from my mistake and hold out for a better applicant. If you're worried about the property sitting vacant talk to your insurance agent about a vacancy clause. Mine costs $46/yr and covers any incidents that happen after the property has been empty for MORE THAN 30 days. Best of luck to you.
Rental Property Investor · San Antonio, TX · Member since 2018 · 11 posts · 7 votes
6y
@Michael A. I am very thankful that you have shared your past experience and that exact situation I want to avoid. I have never heard about insurance vacancy clause, will definitely check with my insurance company Thank you again
Jignesh, you should not; wait for the right tenant, taking on bad risks seldom ends well.
I highly agree with Moises, I had a prospect applying for one my units, and no matter how much i liked the prospect, they were red flags coming up. So, I had to let the prospect go, because the prospect was paying late already the rent every month where she was living at. Sometimes, you got let go to people or things that may cause you headaches, headaches that can be avoided in the beginning. Hope this helps.
Investor · Lexington, KY · Member since 2016 · 13 posts · 13 votes
6y
@Jignesh Savaliya
I have found many good tenants with poor credit but only 1 month since missed payment i would pass on unless their was proof of very good reason.
Prior eviction is a deal killer. Don’t do it. I like second chances but it is best to avoid these folks. It means they didn’t even try to leave or work it out.
Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
6y
@Jignesh Savaliya No! Your place is too nice for that risk. You are not only risking non payment, you are risking property damage. For a piece of crap property you might risk a month at the end (eviction) to grab a month up front. But never risk a nice property. And never, never take tenants that belong in a lower tier class. Are they married? Because one could get drunk and beat the other up and then you have one tenant...probably the worse one left behind. They belong in an apartment complex, not your nice duplex.
Investor · Richmond, VA · Member since 2016 · 164 posts · 114 votes
6y
@Christopher Dean Totally agree with the inability to offer second chances unfortunately. I did that and have been screwed since February. No remorse from the tenant - only excuses and a bad attitude when I ask for rent. Unbelievable. Should have been more vigilant in my background screen.