Has anyone rent to potential tenants who have no rental history?

Question

I am a new investor and I have three prospective  tenants (all will be living together). They have No previous rental history, but as a combined whole they make a little over 2.5 x’s the rent. Any advice and/or tips on this matter as is relates to renting to tenants with no prior rental history ?

Kayla White · Answer

@Alexander Kleyman @Bjorn Ahlblad

Two of three are the ages of (21 and 22), this would be their first apartment, so they have no rental history besides their mom.

The third person is (43), she listed a family member as a reference and another person, but could not find their contact number, only has the address. She’s originally from out of state. So essentially She has no rental history.

Separately they do not make the rent requirement per month, combined they do. This is why I’m so torn, on if i should proceed forward with their application or not.

Ned J. · Answer

Big red flags......

I can understand the younger ones not having a rental history........but the 40 year old?

20 year olds  and 40 year old roommate..... how long do you think that's gonna last?

40 year old out of state with essentially no references or rental history.....

2.5x income for rent...... borderline AT BEST.....3x and up with solid jobs only. It only take ONE to be an issue and they will be no where near able to make rent

That would be a HARD pass for multiple other issues that have NOTHING to do with no rental history to go off ....

Kayla White · Answer

@Bjorn Ahlblad

You guys have made very valid points. Thank you so much for your feedback.

Bjorn Ahlblad · Answer

@Kayla White it is very high risk. One of them leaves and you are sunk. Also not coming up with a reference's phone number? Kayla would you not find that number somehow if you were her. Something is going on here that will make you very unhappy later. Raise your standards. The "I'm from out of town and have no rental history" song has been heard by everyone who has ever been a LL!

Kayla White · Answer

@Adam Martin

The younger ones are of-course building their credit. The older guy, credit is not good at all. Most ppl would honestly turn him away.

Adam Martin · Answer

As a combined while they don’t make over 2.5/rent is a red flag as 3x is the standard for a lot of us. The younger ones not having rental history makes sense but for someone in their 40s that is hard to believe.  If you are in a tight spot and this is the norm renter for your area maybe a co-signer may make sense but personally I would pass.  Did you run their credit and background check and if so what did that look like.

Alexander Kleyman · Answer

I did it for a young (24 yr old) girl who qualified financially and needed her first own place to live, prior to this she has lived with her mom. She had no prior rental history and was very appreciative of “getting a break”.

However in the past 6 months we have learned that she is: young & immature, brat, and is an idiot. She has been feuding with another tenant (Duplex property). She has ruined her chances with us for long term tenancy and we won’t renew her lease. Now she may have rental history but I doubt she’d want to list to mention us to her next landlord as she will not get a good reference.

Bjorn Ahlblad · Answer

@Kayla White The fact that they have no rental history and really low individual income is a bad combination. I have rented to under qualified people but only with a guarantor or they had some other redeeming factor. No rental history but high earnings with great work references.

Generally people with zero rental history could be real, or they are hiding something, often social media will help to uncover those things. I would pass on those three. Better no tenant than a bad tenant.

Brad Hammond · Answer

I have rented to a college student who didn't have any rental history.  It ended up working out really well.  I had his parents cosign on the lease so there was someone else that was financially responsible.  Besides that, you could increase the security deposit since you are taking a bigger risk on them.