Would you rent to this tenant?

Question

Let’s say you had a potential tenant apply to rent one of your properties. Great income at 4.7 times the monthly rent, stable career track with consistent promotions every couple of years, liquid savings equal to 18 months of rent, good 5 year rental history with favorable feedback from all prior landlords indicating all rent payments were received timely and zero damage or any other issues occurred at prior rentals.

However, the individual has a credit score of about 550 with debt that includes $10k+ in credit cards which is all past due, $30k in student loans, $30k car loan, $30k in other debt, and unpaid collections from three different businesses originating 4 years ago.

Would you rent to this individual considering they have demonstrated they consistently pay rent on time, take care of the properties they rent, and have good income & career history, or would the credit score steer you away from this individual?

Adam Martin · Answer

I have in the past and it worked out fine for a couple tenants and really haven't had it backfire on me.  I checked into their rental history and they prioritized rent which was all I really cared about however it was risky and I took an extra 50% security deposit.  Evictions from what I have been told are fairly simple in KY and I figured I'd get them out quick if there were any issues.  That was however before politicians decided tenants rights to stay housed trumped my rights to stay paid.  In the current environment I would pass which is an unfortunate side effect of recent legislation, the bar is getting higher.  It doesn't matter what his multiple of what he makes in income over rent, this person is bad with money and as he gets raises he grows into them.  I used to love people like this since they were likely to pay but unlikely to buy a house, now I have shifted which is unfortunate.  If you do take the risk get the maximum deposit you can and keep it M2M assuming your area allows evictions for holdover, if they don't keep looking.

Gusti Clark · Answer

Yes I would, because they have the ability to pay rent. In fact that was me 2 years ago after my first business failed. Even though I was working thru rebuilding my credit a roof over my head was a bigger priority than paying off a debt. Without a place to live nothing else mattered. I wouldn’t use credit as my sole deciding factor here.

Bjorn Ahlblad · Answer

I had one like that recently and moved on. Figuring he was a hiccup away from meltdown.

Jim Adams · Answer

I personally would not, especially right now when it's pretty easy to find a tenant and very hard to evict.