When choosing a tenant, do you…

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When choosing a tenant, do you…

Heather Rodden
Rental Property Investor · Member since 2018 · 101 posts · 44 votes

I recently had multiple people apply for one of our rental houses. I narrowed it down to 2 people. Do you always go with the best choice even if they only want to rent for a year? First choice has excellent credit score, good income, no rental history because she is relocating to the area and owned her home, 2 cats, but wants to rent for 1 year then buy a house. (Doesn’t want 2 mortgages). The second option has a good credit score, appropriate income, no pets, and wants to rent “indefinitely”. Do you always go with the best option? Or the good option that will be long term?

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Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
5y

I would not rent to a person with 2 cats who views (and likely treats) my rental as temporary housing and could care less about what I think of her (referral). The potential tenant is all but telling you that you have zero influence on her... and 2 cats! Yikes.

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  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    5y

    I think the best option (by a hair) would be candidate #2 but I go with the first qualified applicant that put in a complete application because once you have a reasonably qualified pool of applicants you are really just guessing so I figure that way I avoid some of the bias inherent in these decisions.

    3Reply
  • Heather Rodden
    OP
    Rental Property Investor · Member since 2018 · 101 posts · 44 votes
    5y

    @Jill F. Yes I usually go in order of applications received too. And I got 5 applications today, 4 qualify…typically it is not like that for me. I have long term tenants, and have only had to have new applicants a handful of times. Thanks for your input!

    1Reply
  • Adam Martin
    Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
    5y

    I’m usually looking for longevity and assuming they both meet your basic criteria would go for 2.  Vacancy is my biggest cash killer as well as takes up a lot of time since I do everything myself.  I’m usually looking for what I call the Goldilocks tenant.  Obviously I don’t want anyone under qualified and too bad but I’m also worried about the perfect tenant that can leave at any point.  I’m usually looking for a tenant with decent credit but a track record of paying rent on time.  I want their credit to be borderline where buying a house may be a stretch and them to have savings for moving or an emergency but not necessarily financially ready to buy.  I think some tenants think it makes them look good saying they hope to buy and makes them look financially responsible but at the end of the day has driven me away more than once.  By the time I am showing I have spent time getting the place rental ready and showing and am in no mood to think I’m going to be doing it again anytime soon

    2Reply
  • T Giddens
    Rental Property Investor · Philadelphia · Member since 2020 · 16 posts · 18 votes
    5y

    Long term is golden. 

    2Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y

    @Heather Rodden

    Many young people make the mistake of buying into the 'perfect credit score' BS. It is NOT always a great indicator of how people handle their money or what their true character is. Other than a miserable score, take it out of the equation and go with your gut....

    1Reply
  • Patrick M.
    Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
    5y

    I would not rent to a person with 2 cats who views (and likely treats) my rental as temporary housing and could care less about what I think of her (referral). The potential tenant is all but telling you that you have zero influence on her... and 2 cats! Yikes.

    7Reply
  • Heather Rodden
    OP
    Rental Property Investor · Member since 2018 · 101 posts · 44 votes
    5y

    @Adam Martin

    That is how I’m feeling.

    1Reply
  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    Long term plans are unpredictable and change, for all parties, both of these tenants and you.  Also, some tenants use "we will rent forever" as a way to be considered more favorably.  Not saying yours is lying just saying you never really know what someone's intentions are.  

    That said, we will consider longevity possibilities but as a minor criteria.  Might be worth taking this out of the consideration and see if you still pick them or if this is the only reason you are doing so.  

    2Reply
  • Heather Rodden
    OP
    Rental Property Investor · Member since 2018 · 101 posts · 44 votes
    5y

    @Scott M.

    Very good perspective, thank you this is helpful

    0Reply
  • E.S. Burrell
    Rental Property Investor · MI · Member since 2019 · 192 posts · 205 votes
    5y

    Applicant 2. Reason: No pets, good credit, longevity.

    5Reply
  • Genny Li
    Baltimore, MD · Member since 2018 · 431 posts · 281 votes
    5y

    #2, everyday. Not even a question.

    0Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    5y

    @Heather Rodden what is the retal history of applicant 2? If they are historically a renter i would choose them. This is not because of what they say. It is what they have done in the past.

    2Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    5y

     I'd pick #2, no pets and I'm guessing is more familiar with the area.   Anyone who is already planning their exit,  I don't really like, turnover sucks.

    FYI we always focus on job income/stability as the most important thing, so especially with everything happening last year-- which job is more stable?

    2Reply
  • Heather Rodden
    OP
    Rental Property Investor · Member since 2018 · 101 posts · 44 votes
    5y

    @Colleen F.

    Both are going through a divorce and owned their home.

    0Reply
  • Heather Rodden
    OP
    Rental Property Investor · Member since 2018 · 101 posts · 44 votes
    5y

    @Linda S.

    One is a teacher and the other works in a hospital. Both essential. That was a concern for me too, because they may extend the eviction moratorium in Illinois.

    0Reply
  • Greg KellPro Member
    Greencastle, PA · Member since 2019 · 18 posts · 3 votes
    5y

    #2. No pets, good credit, will stay

    0Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    5y

    @Heather Rodden,

    Not sure about your state laws, but we ONLY do Month to month-- that was our saving grace last year.  People ask if that affects me, and I tell them-- nope, if someone stops paying (obviously we work with them to keep them there!), we have the option to end it. 

      I'd strongly recommend doing that, as people move if they want to move, and it gives you power back as a landlord if anything goes south.

    0Reply
  • Account Closed
    Rental Property Investor · Indianapolis, IN · Member since 2020 · 562 posts · 554 votes
    5y

    @Heather Rodden

    Is applicant 2 willing to sign a 2 year lease? If not their intentions may not truly be long term. I prefer longer term leases if possible.

    Also check your local laws. Some areas require that you lease to the first qualifying applicant to avoid discrimination, but every locality is different.

    0Reply
    • Colleen F.Pro Member
      Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
      5y
      Originally posted by @Account Closed:

      @Heather Rodden

      Is applicant 2 willing to sign a 2 year lease? If not their intentions may not truly be long term. I prefer longer term leases if possible.

      Also check your local laws. Some areas require that you lease to the first qualifying applicant to avoid discrimination, but every locality is different.

      @Account Closed you would actually do a 2 year lease with this eviction moratorium going on and on?? Even good people can go wrong, my sister had a 3 year tenant who just went bad one day.  Then the divorce and the house was a disaster when she took it back.

      0Reply
    • Bruce WoodruffPro Member
      Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
      5y
      Originally posted by @Account Closed:

      @Heather Rodden

      Is applicant 2 willing to sign a 2 year lease? If not their intentions may not truly be long term. I prefer longer term leases if possible.

      Also check your local laws. Some areas require that you lease to the first qualifying applicant to avoid discrimination, but every locality is different.

      "Some areas require that you lease to the first qualifying applicant to avoid discrimination,"

      Easy enough to get around.....

      0Reply
  • Jamie Grubb
    Lender · Houston · Member since 2018 · 18 posts · 18 votes
    5y

    I agree with the others here, that #2 is the better option.  Unit turns can be expensive, and unit turns after pets can be really expensive!  If you can lock in a longer-term lease (>1 year), that would be an even better option.

    1Reply
  • Melody R.
    Real Estate Agent · Los Angeles · Member since 2018 · 80 posts · 75 votes
    5y

    @Scott M. I completely agree with this. Circumstances change. I’ve had tenants say that they plan to stay for years and only a few months later vacated due to a job change or relationship change and so on. In my case, lease breaks aren’t terrible since the tenant is responsible for all turnover costs and the rent until the new tenant moves in but I have far too many examples of a “long-term tenant” moving before the lease expired.

    0Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    5y

    They both check all qualifications, but I would pick tenant number 2. You would avoid vacancy and has no pets, which that is hard to find. Pets can cause damage to a property, and it's preferable to avoid them at all cause.

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  • Account Closed
    Rental Property Investor · Indianapolis, IN · Member since 2020 · 562 posts · 554 votes
    5y

    @Colleen F. Yes I would, in fact I have two properties with 2 year leases now. There have been a couple bumps, but the tenants have always caught up so far.

    When it comes to evicting someone and getting them out of your property I don’t really see that it matters to much how long the lease is. Once the lease is up that can still try to stay in the property. It’s a fight either way if they have “gone bad”.

    0Reply
    • Colleen F.Pro Member
      Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
      5y
      Originally posted by @Account Closed:

      @Colleen F. Yes I would, in fact I have two properties with 2 year leases now. There have been a couple bumps, but the tenants have always caught up so far.

      When it comes to evicting someone and getting them out of your property I don’t really see that it matters to much how long the lease is. Once the lease is up that can still try to stay in the property. It’s a fight either way if they have “gone bad”.

      @Account Closed  but the eviction moratorium in some states does not apply to holdover tenants. That means on lease end or 30 days on month to month you give them notice and then can evict if needed as they are a holdover tenant.  If they were longer leases you can't evict for non-payment now in many areas.  

      In addition a PIA tenant can just be given notice to leave at the end of their lease and on I have had tenants that even 1 year was too long they were so needy. 

      0Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    5y

    Well, legally you must accept the first qualified tenant in the order received. "Cherry picking" applications violates the Equal Housing Opportunity Act, or so I have been advised. This is NOT legal or professional advice and I am NOT a legal professional.

    0Reply
  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y

    I as well always just go with the first person who gets a fully complete application in, and then I work in order of applications.  If it is close however, on the timing, I'd personally see if Option #2 is willing to sign a 2 year lease?  I've had success finding good tenants using that strategy, most times I'll actually offer a discount to sign the 2 year lease, but that's just me, the longer lease and lack of turnover is really worth it to me so I try and make that happen.   

    [email protected]614-362-2231
    2Reply
  • Heather Rodden
    OP
    Rental Property Investor · Member since 2018 · 101 posts · 44 votes
    5y

    @David Dachtera

    #2 was actually my first applicant so it works out. Thanks :)

    0Reply
    • Cary O.
      Rental Property Investor · Dallas/Fort Worth, TX · Member since 2017 · 64 posts · 59 votes
      5y
      Originally posted by @Heather Rodden:

      @David Dachtera

      #2 was actually my first applicant so it works out. Thanks :)

      @Heather Rodden

      It sounds like you have made a selection on a qualified tenant. If so, congrats!  For the sake of discussion, just wanted to throw out another perspective. If the "cat lady" had been applicant #1, you could require a non-refundable pet fee or a combination of pet deposit + non-refundable pet fee ($350-$500 total is within the norm in our market). In addition, we are now seeing monthly increased rent by $25-$30/month per pet on leases. When we first started out as landlords, we were not comfortable with tenants having any pets. Since then, we have added a small dog to our family and consider our pet as a member of the family. We now allow pets on a case by case basis, typically small dogs (out of the puppy stage - to avoid chewing issues- and prior to elderly ages). We just mitigate potential future expenses with the pet fees /increased rent with pets. Cats may be a non-negotiable for you. If you are in a market where rents are increasing YOY at over 10%+ per year, you may not want to lock in a 2 year lease at current market rents, depending on if your rental is a class A or B class with higher rents. You can extend the lease and increase rent price to stay closer to fair market rents after the 1 year term ends. In the past, we would have agreed with the 2year lease term being preferable. Now that housing is in such short supply and home/rental prices continue to increase monthly, we expect more tenants staying in place this year and next year and see less benefit to us for a 2year lease as we expect most of our tenants to renew. As the saying goes, "Real estate is local", and changing all the time. 

      1Reply
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