Need help on deciding a tenant

2 Replies

Hi,

I am in the process of deciding a tenant whose credit score is 556. The wife has an income of 36k and the husband has a used car sales business. They are young and desperate to move and willing to consider a 2-year lease for 50$ less as well. I called their reference who gave a good one as well. I do not have a tenant yet and desperate to get a tenant given that I have to put a mortgage in December. 

1. What else would you consider or should I ask for before I make the decision on the tenant?

2. If they ask for a pet, what should be the pet fees be?

Buyan

First, you should consider what expenses your property typically produces for tenants in addition to the rent. You can then get a vague estimate as to whether they can actually afford the property.

Second, you should consider the area and cross-reference that area's median income with your prospective tenant. If the area is lower-grade, then waiting might not get you a better tenant.

Third, as to pets, you should probably say no, especially if it's a cat. Moreover, if you are in a lower income area, definitely not. However, if you enjoy taking more risks than necessary, you can consider a pet deposit and/or pet rent, if applicable. I've seen $300 deposit for the pet and $25-$50/month extra. Also add this into your primary consideration as to whether they can afford the place.

Lastly, a two-year lease might not mean anything if they just bail on you at some point during the agreement.

Hi  Buyan,

You seem to be in a very risky situation at the moment. You may be desperate to get a tenant in the house, but would you accept these applicants if you had more time? From the information you gave, this is what I see.

1. Credit 556. Did both applicants apply and did you pull credit on both of them? This is a low score. Why is it this low? 

2. Wife's income is 36k, but what is his income? He owns a used car sales business, so what does he profit each year? If he doesn't have regular paystubs, you can still request proof of income such as bank statements or tax returns. They can block out any sensitive information and/or account numbers.

3. Please keep in mind, a 2 year lease does nothing for you if they are not paying. Why reduce the rental amount for an extended lease? You can always do a lease renewal each year.

4. I'm hoping their reference was the past landlord and not a personal reference. Does the landlord listed actually own the property? Do a parcel search to verify. (I've had applicants give their friends as the landlord, which of course, give a great landlord reference.)

5. Pet deposits are normally half or full amount of the monthly rent. Are you allowing pets in your home? You should already know if they have a pet. Your application should ask what type of pet they have, the breed and age.

I process applications on a weekly basis, so I understand your eagerness to get the property filled. Do you have any other applicants to choose from? Go with your gut on this one and get more information from your applicants.

Good Luck!!

-Jessica

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here