Hope everyone is well.
House for rent on market for 4 months, recent price reduction.
I have 3 applicants, employed, mid 20s, combined monthly income is $200 short of (3 x rule). 2 of them have excellent credit, 1 has no credit yet. All 3 are moving out of parents home for 1st time.
How would you handle this and why?
Thanks for your feedback.
@Luke H. In that situation we usually have parents co-sign. We’ve never had an issue with that. Typically the kids take better care of the house when parents co-sign too (at least in our experience)...
@Luke H. I know you said they have good credit, but what is their debt load and how does that compare to their income?
Run a budget as if you were them. Put all their expenses on one side and put their income on the other. Is there money left at the end of the month, or month left at the end of the money?
If the numbers are right, I say yes, with a full security deposit and possibly a parent's co-sign.
I would collect an additional deposit of 1.5 or 2 months and accept them. Sounds like they all have something to lose if things so sideways, those are the kinds of tenants you want.
Since this is their first apartment just make sure to reiterate to them they are all on one lease. If the ship goes down, they all go down. Thank
I run eviction, criminal background as well as credit checks. Part of my process is Debt to Income (DTI). They must be under 45%. Look at what kind of debt they have. Car loans, credit card debt, collections, etc. If there in collections and living at home that's not a good situation unless there are extenuating circumstances you can verify. A co-signer is a great idea.
Sounds like a roll of the dice to me. You will never know but on it´s face its a very wide possibility for default eventually. Too much youth, instability and inexperience. Without a very strong co-signer or a belief another renter can´t come along anytime soon I would wait longer for a much stronger probability.
It´s such a funny business and you never know. As stated above, on this specific situation I´d be very weary but something similar happened once before. Not that mix of tenants per se but I had some that were weak on paper. A lot about them sent up multiple red flags. This is a class D property and very hard to rent anyway. I went back and forth but something told me this specific case may be OK. I went for it. Best tenants I´ve ever had since being in this business. They are incredible. 9 times out of 10 my instincts are correct but this one broke the mold. You never know!
I've asked for a Residential Lease Guaranty from parents. I'll keep you posted on how that goes. I'd rather play it safe, than take the risk.
Thanks to all that responded.
Parents cosign is the safe way here.
I would have 3 separate leases. Collect large deposit and possibly the last month rent.
Only with a parent co-sign. One lease....... the 3 tenants are to be treated as one...... if the rent doesn't get paid, they all get evicted. One rent payment.......
Young, inexperienced with borderline ability to pay rent for a consistent time.....3 new room mates........ its gonna be a gamble, so you need to protect yourself.
Personally this would only be a remote consideration since its been vacant for quite awhile now.... otherwise I would pass if I had other applications
We all start off somewhere and need some one to take a little chance on us....some times it pays off to be that person....sometimes you get kicked in the nuts
@Luke H. I agree with the others on the parent co-sign. I think that holds more weight than additional deposits. Also if you’re worried about them often maybe a quick social media lookup to see if you’re dealing with any knuckleheads.