Hi All - Just got an application from my leasing agent on a house. This family has a small (think 800 sq ft) paid off house in the same city and is looking to rent my SFM which is 1400 sq ft. They’ve lived in their current house for almost 2 decades - so no real rental history although no evictions either. They have enough income (>3x) and it is steady although credit history isn’t great (550) - vast majority is due to medical collections for which they get disability. Any thoughts on how to check “rental payment history”? They meet the 3x income to rent but I know BiggerPockets rental guides usually want to see that plus good rental payment history and good credit. Also is medical collections something you would overlook / weight lightly?
And are there other options like going month to month / a two month deposit / or a co-signer you would consider if you couldn’t get more color - or just pass all together? The leasing agent is taking 3 weeks to qualify a candidate - so I’d probably have to wait another month to fill this slot (or change leasing agents).
Ask them if they have ever rented before. When and from whom? Were their names on the rental agreement? Ask them how did it go? Ask them what they learned from that experience. That may glean you some valuable information. Don't bother to call landlords from 20 years ago. Instead, look at all the other factors. How responsible are they in paying their utility bills? Do they have any other bills past due, other than the medical bills? If they have a low credit score, but are fine on all other counts, then accept them and just obtain additional security deposit due to the credit risk as evidenced by their low credit score. You are not in the financial lending industry, so focus on what really matters to you.... are they likely to pay rent on time, pay their utility bills on time, take care of the place, and follow the terms of your rental agreement?
For residence/rental history:
1. Examine the most recent seven years of residence history.
2. Verify home ownership through the tax assessors office and/or credit report.
3. Verify rental history through the property owner and/or rental agent.
4. The credit report will reveal specific weaknesses... hone in on the ones that relate to being able to be a successful tenant.
I wouldn't pass on them because of the reasons you stated. Many successful tenants have weaknesses in their past. Assess what you need and what they bring to the table, then go from there. We always use month-to-month (M2M) rental agreements, as they allow us more flexibility. We don't bother with co-signers, as they don't really afford us greater security.... a bigger security deposit is much more valuable. Finding a good applicant and verifying them can sometimes take awhile. So I wouldn't give up on your leasing agent at this point. Instead, keep in good communication with them and ask them what them to share their insight with you about the pros and cons of this candidate. Don't hold out for perfection.
Go look at their house . See how they maintained it
I would look at the county records and see if they are up to date on their property taxes and verify that the house is paid off (release of mortgage). If you see any indication that they lied do not move forward.
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