1 years rent up front

Most Popular Reply

Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
4y

For me it is a red flag and requires extra screening. Why would a sane person with a very healthy credit score want to do that? In some states you are not allowed to accept that much up front. You accept it and it is taxed in the current year LL books are on a cash basis. Let's say for some reason you are asked to pay some of it back-then what. 

Generally when an applicant waves money under a LL's nose they want you to limit your screening and not uncover their serious warts. Maybe the property was not for her, it was for someone else who is now cooking meth in your house. But you don't see the need to inspect because you got money up front.

I would not rule the applicant out. I would screen them a lot more closely than otherwise.

Screen like your life depends on it, because it does!

10Reply
See this reply in the discussion

37 Replies

Jump to latestLatest
  • Taylor DaschBusiness Member
    Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
    4y

    Eh, im not sure but if it was me, I would take it lol. I'd put aside about 10-20% of in case of an eviction but if their credit score is that good, I doubt they would want an eviction to ruin it. 

    [email protected]254-718-4249
    Taylor Dasch | EG Realty560 Reviews
    WebsiteView Page
    3Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    4y

    For me it is a red flag and requires extra screening. Why would a sane person with a very healthy credit score want to do that? In some states you are not allowed to accept that much up front. You accept it and it is taxed in the current year LL books are on a cash basis. Let's say for some reason you are asked to pay some of it back-then what. 

    Generally when an applicant waves money under a LL's nose they want you to limit your screening and not uncover their serious warts. Maybe the property was not for her, it was for someone else who is now cooking meth in your house. But you don't see the need to inspect because you got money up front.

    I would not rule the applicant out. I would screen them a lot more closely than otherwise.

    Screen like your life depends on it, because it does!

    10Reply
  • Berdine Ramos
    OP
    Accountant · Long Beach, CA · Member since 2015 · 12 posts · 6 votes
    4y

    Thanks. I will proceed cautiously. So tempting to get it rented but still have time to hopefully screen some more applicants.


    0Reply
  • David Vaughn
    Contractor · shelby · Member since 2022 · 60 posts · 42 votes
    4y

    I wouldn't do it. I have never had luck with someone paying a large sum up front and so much so I now refuse every time. JMO

    1Reply
  • Shiela R.
    Investor · Boulder, CO · Member since 2017 · 304 posts · 347 votes
    4y

    Great question @Berdine Ramos!  I'm gonna echo the sentiment on finding out exactly why this applicant is so willing to pay upfront?  Is your market super hot?  I mean, I had some applicants want to give me a lump sum of cash but it was due to explainable circumstances like a housing/rental shortage or extended, out of country travel.

    Get landlord references. And what does this person do for employment? Have you verified?

    I'd keep a reasonable reason for you to visit the property, say by Feb 1 to change the furnace filter and make sure you don't have a grow house or something along those lines;)  I see you are in CA, make sure you are covered in your lease for grows, illegal substance, etc.

    6Reply
  • Tim Miller
    Rental Property Investor · Laurel, MD · Member since 2016 · 378 posts · 382 votes
    4y

    Yes, it's a big red flag! Plus you cannot accept it in Maryland. Maryland law clearly states that you can only hold 2 months worth of rent, security deposit and last months rent. Anything more and you open yourself up to being sued.

    4Reply
  • David A Lisowski
    Rental Property Investor · Inlet Beach, FL · Member since 2018 · 199 posts · 111 votes
    4y

    Can't the prospective tenant just put the 1 year of rent in an account and just pay you like normal?

    You can at least ask why they are wanting/willing to pay upfront like that.

    0Reply
  • Victor Castro
    Member since 2022 · 7 posts · 3 votes
    4y
    Quote from @Bjorn Ahlblad:

    For me it is a red flag and requires extra screening. Why would a sane person with a very healthy credit score want to do that? In some states you are not allowed to accept that much up front. You accept it and it is taxed in the current year LL books are on a cash basis. Let's say for some reason you are asked to pay some of it back-then what. 

    Generally when an applicant waves money under a LL's nose they want you to limit your screening and not uncover their serious warts. Maybe the property was not for her, it was for someone else who is now cooking meth in your house. But you don't see the need to inspect because you got money up front.

    I would not rule the applicant out. I would screen them a lot more closely than otherwise.

    Screen like your life depends on it, because it does!


     Huh, im a newer investor and I would have never thought of this. That's....a very good point

    0Reply
  • Joe Norman
    Property Manager · Baltimore, MD · Member since 2014 · 1k+ posts · 1k+ votes
    3y

    I don't understand all the fuss. I would still put the tenant through my normal screening process regardless of their ability/willingness to pay up front, but aside from any local laws prohibiting it this can only benefit the landlord.

    Someone mentioned that the applicant could be a front for another intended occupant, but thats always the case and your lease should be clear that unauthorized occupants are prohibited.

    Screen the tenant. If they have acceptable eviction/credit/criminal history then take their money and be thankful you don't have to collect rent for the next 12 months.

    4Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    3y

    HUGE red flag for me..... prospective tenants throwing around big $$ up front is often an attempt to blind you with cash and have you overlook something that will bite you in the *** later. 

    Occasionally you may get a real solid reason, but most are hiding something... HUGE red flag to me.

    Some states its illegal to do.

    If you consider it, I would screen them 5x harder and want serious verified references

    2Reply
  • Alyssa Goade-Munch
    Member since 2022 · 10 posts · 2 votes
    3y

    Yikes--tax nightmare and extra work for you.  We have chosen NOT to do this.  They usually ask for a discount as well.  

    0Reply
  • Alyssa Goade-Munch
    Member since 2022 · 10 posts · 2 votes
    3y

    Oh, and many times, they have just sold a house and the rental market is crazy, so sometimes valid.  but still tax nightmare for owner.

    0Reply
  • David Shakhunov
    Investor · Sacramento, CA · Member since 2020 · 33 posts · 19 votes
    3y

    I would not take it. Sounds like the applicant is a "professional" tenant. A lot of states are only allowing deposit that is worth of 2 months rent. There is a chance that this tenant might request it back after they move in. There could be different reasons. One is already mentioned is to "bypass" screening. The another reason could be that they want to move in ask for it back and you are obligated to return it. Renter will stop paying. Usually people will the low credit scores do that so I would make sure the credit score is actually accurate. My gut feeling telling me that somehow their credit score is not 790 and they are trying to distract you by offering a lot of money up front. 

    0Reply
  • Derick Bonsu
    Investor · Washington, DC · Member since 2018 · 93 posts · 54 votes
    3y

    As others have said just screen well but it's not an automatic no. I've accepted a full year before for a group of students. Their payment was coming from their loan. Different circumstances. 

    1Reply
  • Adam Bartling
    Lender · Rosenberg, TX · Member since 2022 · 286 posts · 130 votes
    3y

    Have yall ever thought that the prospective tenant might be offering this as an incentive, they may think this would secure the lease as it is prepaid for an entire year.  

    3Reply
  • James Peters
    Rental Property Investor · Baltimore · Member since 2022 · 26 posts · 24 votes
    3y

    I had tenant like this. He would pay 6-8 months of rent at a time. Never a problem. Can’t always assume the worst. Just screen them as you would anyone. 

    5Reply
  • Marlia Stone
    Rental Property Investor · Member since 2018 · 61 posts · 33 votes
    3y

    @Berdine Ramos I would take it but continue to do my due diligence with the background check prior to the lease commitment.

    2Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    This is just so suspicious.....why in the world would someone give up that much money and let it sit, rather than have it invested and making money? At the very least, this shows that the tenant has zero money sense. That alone is reason to say no.

    And never worry more about getting your place rented than getting a good solid renter, Never. It's not worth any risk....

    If you like the tenant otherwise, then just have them sign a normal lease and pay you normally....

    1Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    3y

    Ask them why?   The money would have to be returned if they don't stay.  There are reasons I would not look at this negatively but I might consider it a red flag if they do it to try to get you to overlook another deficiency.  On the other hand someone who is looking for a while or works down the street and wants this apartment in particular might make this kind of offer.  Someone who must keep kids in a certain school district, etc.  Not all motives are bad.

    0Reply
  • Malkia Ra
    Rental Property Investor · Prince George's County, MD · Member since 2022 · 177 posts · 187 votes
    3y

    Yeah, it's concerning... but a 790 credit score and a whole year's rent upfront??  I'm jumping on that.  After I've super-screened them, of course.

    And I agree with @Joe Norman

    0Reply
  • Isaac Pepper
    Rental Property Investor · Zanesville, OH · Member since 2020 · 70 posts · 78 votes
    3y

    @Berdine Ramos

    One of my tenants pays 6 months at a time. However he runs a company and has employees stay in it when there are in town.

    No issues and I have a deposit on top of that.

    I would do this with an individual all day, walk away and forget about it. I've chased too much partial payments to not collect it all at once.

    1Reply
  • Diya Wahi
    Real Estate Agent · Santa Ana, CA · Member since 2016 · 56 posts · 32 votes
    3y
    Quote from @Berdine Ramos:

    We have a rental opening up Nov 1, and have one applicant with a credit score of 790 offering to pay the full years rent up front. Red flag?

    Thank You


     You and I live in the same general area. Paying up front has become more common in this part of Southern California. I also agree with the advice that you proceed with caution while screening the prospect. But I think this is normal now for LA/OC. I was helping a client look for rentals in Irvine a few months ago and many of the renters we were up against had the ability to pay 1 year up front (approx $60,000).

    0Reply
  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    3y
    Quote from @Berdine Ramos:

    We have a rental opening up Nov 1, and have one applicant with a credit score of 790 offering to pay the full years rent up front. Red flag?

    Thank You


     Not necessarily a red flag, but it's not a good idea to accept rent in advance. If you need to evict for another reason, it can really complicate the matter. If they can afford to pay an entire year in advance, certainly they can budget for montly payments. 

    3Reply
  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    3y
    Quote from @Joe Norman:

    I don't understand all the fuss. I would still put the tenant through my normal screening process regardless of their ability/willingness to pay up front, but aside from any local laws prohibiting it this can only benefit the landlord.

    Someone mentioned that the applicant could be a front for another intended occupant, but thats always the case and your lease should be clear that unauthorized occupants are prohibited.

    Screen the tenant. If they have acceptable eviction/credit/criminal history then take their money and be thankful you don't have to collect rent for the next 12 months.


     I am the same way, 790 credit score, good job, on year rent 

    what is the problem ???

    Dont rent it to somebody who does not meet your requirements but why would not rent it to somebody who fits into your requirements anyway...

    You would rent it same person if he/she pays you one month but if they pay you 12 months it is a problem.

    2Reply
  • Rob Chiang
    Rental Property Investor · San Mateo, CA · Member since 2017 · 108 posts · 49 votes
    3y

    Just complete the full screening process before making the call.  What about all the other occupants?  Just one to consider? 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free