Is it always bad to offer a large sum/full rent up front?

Question

So we are about to get a pretty large settlement of about $30,000. I know a lot of landlords on here caution against people who offer the full lease or any large payment amount up front. But, is it always a bad thing or a red flag?

I mean if I went to someone here in Texas, where there is no limit to how much can be changed or paid, and said “we just got a large settlement and want to pay the entire year up front to ensure both our stability and your income are ensured;” does that risk being denied? Because that’s incredibly stupid if it is. We aren’t drug dealers or shady in any way. We are getting a settlement from a lawsuit, one of us is starting school and the other is starting a small business. This would prevent anyone from having to stress about whether rent would be paid or not.

Bjorn Ahlblad · Answer

Account Closed Paying a large amount up front is a practice often used by shady people who have things to hide and cover up. Tenants know that LL can be distracted by large amounts of greenbacks. They may not bother to screen, check employment, references etc.

If you say it is from a lawsuit- one might think 'what if they sue me'?

Drug dealers and those wanting to set up a drug house will pay in advance give you no reason to inspect the property to see what is going on.

A thorough LL will sense up front money as a red flag. Offering to pay a year up front may get you denied. Being in your own business with no track record of financial performance may also get you denied.

Eviction moratoriums, and general interference by politicians and activists has many LL's raising the requirements and being a lot more picky about whom to approve. All the best!

Bruce Lynn · Answer

We've done it many times, just for the reasons you state. Every time it has been legit and a bonus for the owner. Plenty of great reasons people do it. Had a gal get divorced, sell her home and was probably not that great of a money manager yet, so wanted to pay a year up front with the proceeds from the sale. I think she did the same thing second year if I remember correctly. We've rented to military vets using GI bill, and other students who get loan amount up front and want to pay rent up front....so they know they're covered for the semester or year.

I'm sure there are shady circumstances too.

The one risk for you I think is if the rental is not legit. That means maybe it is an arbitrage deal, or sublease, or just plain fraudulent. We do see plenty of that crap, so make sure you 100% know who you are dealing with. Meet the realtor or PM at their office. Call them at the office number, not cell phone. Get a business card that matches the physical address, etc. No wire transfers, no western union, no preachers who have gone to Africa and just want to put someone in the home for 1/2 price to take care of it...no place that you can't see inside the house....ALWAYS you want to see inside. So you don't want to give a year up front to someone who then doesn't pay the mortgage, gets foreclosed on and gets you kicked out of the house....or the person who is scamming and just disappears with a year rent.

Nathan Gesner · Answer

It's a red flag, meaning an indication something may be wrong. However, I don't make my decisions based on one factor. I look at the entire picture to see if there's a valid reason for paying up front, if they are trying to circumvent my screening, hide something from me, etc.

I have several renters that pay one year in advance, every year. I get people in my office every 1-2 months offering to pay "all cash, right now" to move into a place, but when I tell them they have to submit to a credit/criminal screening first, they disappear.

Peter M. · Answer

@Eric Weldon-Schilling You could consider escrowing the money. That way the landlord knows its there and will get paid and you know that if something happens like the landlord is a scumbag you can not release it. A title company can act as escrow and you'll have to pay them a fee and add an addendum to the lease to address it but it can work for both parties.

Account Closed · Answer

Flip side, what if your landlord is terrible and you have a fallout half way through your lease. If he violates the lease and yall want to part ways and leave, you'd have to work on getting your money back...

Doug Spence · Answer

Account Closed Why not just keep the settlement money in a savings account (separate from checking so you're less likely to spend it) and pay the rent monthly rather than all at once? Are you worried your spouse will blow through the money and you won't be able to pay rent?

Curtis Mears · Answer

@Eric Weldon-Schilling

Is there a reason to pay upfront, poor credit, previous conviction, etc? I would not offer to pay upfront unless they decline in the app process. If you do have poor credit or evictions, no amount of money will convince me to rent to you. Also, the full rent only lasts 1 year, what happens after that? As a landlord, I would prefer a larger security deposit, as that remains as long as you lease from me. I have rented to BK and less than stellar credit tenants by collector larger SD.

Is it always bad to offer a large sum/full rent up front?

Is it always bad to offer a large sum/full rent up front?

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