Renting to "Risky" tenant?

Question

Hi I own a duplex and have been having trouble renting one side of the unit.

What would you do?

We recently received a tenant lead from an individual with questionable sources of income and limited rental history (discrepancies between the application and credit check).

My 2nd thought are to rent to her if she can come up with the 1st month rent and the full security deposit.

At a minimum it'll bring in some income, as opposed to not.

My rationalization is that I can just evict her if things don't work out. At the moment, it seems like it's no greater risk, than any of my other tenants.

Account Closed · Answer

No, No, NO! Your thinking is completely warped. What is the value of the duplex? 150K, 200K? You are putting that whole asset in the hands of someone sketchy. Can they damage the property more than the 2 months rent you may be able to collect up front? Unless your property is D class garbage, its a huge mistake to rent to non qualified tenants. In a eviction moratorium Covid world, double so. Id keep a property empty for a whole year rather than do that.

Jennifer T. · Answer

I've had droughts sometimes with rentals also.  It's tempting, but don't do it!  Now is the time to be especially careful with who you rent to with all the eviction problems going on.

In pre-pandemic times, I was almost always sorry when I lowered my standards.  One person I did that for had a problem paying rent almost from the day she moved in and I had to evict her only 8 months later.  Hindsight is 20/20, but I WISH I had waited for a better candidate.

I'm glad you passed when that person didn't have the full SD and first month's rent anyway.  Never let someone move in with a "promise" they will pay the rest of the SD the next month or whatever.  I made that mistake in my earlier, more naive days!

As another warning, I had some vacancies in July-Aug. of last year and noticed a major uptick in people lying about who their landlord was.  I don't know about your parish but, in Orleans parish, you can look up property records online.  I do that before I call a landlord reference and see if the name matches.  There can be reasonable explanations if it doesn't, but that puts me on alert.  However you slice it, sometime during the call, I will casually ask a question that probably only the real owner would know.  My favorite is when the property is owned under a business name.  Towards the end of the call I'll ask, "For verification purposes, what is the name of your business that you own this property under?"  Get's 'em every time when it's fake.

Peter Tverdov · Answer

You will wish that unit is still vacant when that tenant becomes a nightmare. Lower your price or update your unit and you'll get better candidates.

Kyle J. · Answer

Account Closed Don't lower your standards.  In general, it's better to have no tenant than a bad/non-paying tenant.  That's even more true nowadays in the era of eviction moratoriums where it's much more difficult to actually evict tenants.

Joe Splitrock · Answer

I do agree with what most are saying. In my experience a vacant unit is better than a trouble tenant. However, it also depends on your financial situation and the asset class itself. The reality is that C or D class properties serve the sub prime tenant base. Generally when renting properties to this group of tenants, your rents are higher than they would be high quality tenants. If you rent to risky tenants, you need to stay on top of them. Make sure they are paying rent and taking care of the property. It is extra work, but if you need to get the unit filled and want to maximize rent, you can do it.

I think some of us landlords, myself included, turn our noses up at high risk tenants. The truth is if no landlord rents to them, they become homeless. I am thankful for landlords who fill this gap. There are good people that just fell on bad luck, so not all risky tenants will be trouble. Just be careful and enter into this eyes wide open.

Greg Jeanfreau · Answer

@Rema W. Lower your rent by increments of $25-50 every few days until you hey a steady pool of quality candidates. If you are going to make any improvements, make sure that the market will support the rents that you will expect from these improvements. Also, where/how are you advertising?

Alexander Szikla · Answer

Evictions during COVID are going to be tough and I wouldn't take someone on with a plan to evict in the first place. That is just bad business for you and the tenant.

Evictions are costly, time consuming and stressful. Just be patient until the right tenant comes along.

Aigo Pyles · Answer

Wait for the right one. It is better to wait than to fill your property with a risky tenant.

Nathan Gesner · Answer

A vacant unit is far less expensive than a bad renter.

Be patient and wait for someone decent. If you can't wait, lower the price but increase your standards to get a quality renter and stop the bleeding.

Joel Betances · Answer

@Rema W. All depends how much risk you want to take. I had my rental unit vacant for about a month and half due to bad tenant applications. Your income must be triple the rent and you must have no evictions and no huge debts that you owe. I take no risk especially with the rent moratorium

Renting to "Risky" tenant?

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