Prospective tenant checks all boxes but has bad credit
Rental Property Investor · The Shores of Lake Erie · Member since 2018 · 33 posts · 15 votes
Looking for advice on a potential tenant. Ran application through rentredi. No criminal or evictions. Has been in same rental for 9 years. Moving b/c landlord is selling duplex and she has always wanted to live in my property. She has emailed me about once a year asking if I have openings. Im lakefront on lake erie and she lived across road. Solid income at 4x rent at a good hospital job. But her credit is bad, 480s bad. Looks like a bunch of small balance credit cards and such. She gave me her current landlords info and permission to contact. If all checks out with him im leaning towards a yes. Should I reconsider?
How long has she been at the hospital job? I've often thought of stability as or more important that credit score. If she's been in one place for 9 years plus her job for several years as well those are two big pluses. I'd also ask the previous landlord for reference.
How long has she been at the hospital job? I've often thought of stability as or more important that credit score. If she's been in one place for 9 years plus her job for several years as well those are two big pluses. I'd also ask the previous landlord for reference.
How long has she been at the hospital job? I've often thought of stability as or more important that credit score. If she's been in one place for 9 years plus her job for several years as well those are two big pluses. I'd also ask the previous landlord for reference.
How long has she been at the hospital job? I've often thought of stability as or more important that credit score. If she's been in one place for 9 years plus her job for several years as well those are two big pluses. I'd also ask the previous landlord for reference.
been at current hospital for 10 yrs so solid history
@Brent Rieman
Do you have written rental criteria? Does this person pass all your rental criteria?
480 is really low. There has to be more going on than a few low balances; ie: late or missed payments, etc.
Don’t always trust the current landlord; they may be incentivized to get rid of the tenants, especially if they are selling. They can get rid of a problem tenant and sell a vacant house, which is much more desirable.
Yeah, you have to work really hard to get a 480. Really hard. There has to be something else going on.
But what do your screening criteria say? What is your minimum acceptable credit score? I bet it's not 480.....
Point is - what's the point of having screening criteria if you don't follow them? Next will you ignore the 3x rent rule? Or the prison record rule?
Supporting what @Bruce Woodruff said with 3 hands. It is REALLY, REALLY HARD to have 480 credit score. Major delinquencies, multiple late payments, skipped payments.
Considering you have a screening criteria and 480 is not your minimum credit score, what I am hearing is this: "Man, I met this beautiful woman, that I had dreamed of. Clean, loves to cook, has big ..... dreams, wanting to big successful in life and leaving a legacy behind, BUUUTTT once in a while she looses it and goes out, gets drunk and cheats on me."
I tried an analogy, but I am not as good as David Greene. I am trying though
It’s a combination of factors and what your goals are overall. I’d ask if she knows her credit is that low and see what she says. Maybe she’s a victim of identity theft. There needs to be a good reason. But if a long term tenant is the goal, I’d take someone with a 10 year work and rental history at one place and bad credit over someone with a 750 that’s lived in 9 places in the last 9 years every time.
Supporting what Bruce said with 3 hands. It is REALLY, REALLY HARD to have 480 credit score. Major delinquencies, multiple late payments, skipped payments.
Considering you have a screening criteria and 480 is not your minimum credit score, what I am hearing is this: "Man, I met this beautiful woman, that I had dreamed of. Clean, loves to cook, has big ..... dreams, wanting to big successful in life and leaving a legacy behind, BUUUTTT once in a while she looses it and goes out, gets drunk and cheats on me."
I tried an analogy, but I am not as good as David Greene. I am trying though
It’s a combination of factors and what your goals are overall. I’d ask if she knows her credit is that low and see what she says. Maybe she’s a victim of identity theft. There needs to be a good reason. But if a long term tenant is the goal, I’d take someone with a 10 year work and rental history at one place and bad credit over someone with a 750 that’s lived in 9 places in the last 9 years every time.
Looking for advice on a potential tenant. Ran application through rentredi. No criminal or evictions. Has been in same rental for 9 years. Moving b/c landlord is selling duplex and she has always wanted to live in my property. She has emailed me about once a year asking if I have openings. Im lakefront on lake erie and she lived across road. Solid income at 4x rent at a good hospital job. But her credit is bad, 480s bad. Looks like a bunch of small balance credit cards and such. She gave me her current landlords info and permission to contact. If all checks out with him im leaning towards a yes. Should I reconsider?
Ask her why her credit is so low. It could be
1. Identity theft - someone stole her identity
2. Medical bills gone bad
3. Divorce
4. An attempt to start a business on the side that went bad
5. That trip to Vegas (I had one that admitted to that) ;-) No, I didn't select her.
6. An auto accident
7. A bad event years ago
Any NEW issues in the last two years?
Utilities paid on time?
A landlord will lie to get rid of a bad tenant but a utility will ding their credit, it's a better indicator.
I'd ask the tenant for copies or proof of the last 12 months of rent being paid on time 1st of all.
& then if that wasn't satisfactory on how new the dings are. Anything more than a couple of years old, I'd probably overlook it. She's not applyig for a mortgage here.
It’s a combination of factors and what your goals are overall. I’d ask if she knows her credit is that low and see what she says. Maybe she’s a victim of identity theft. There needs to be a good reason. But if a long term tenant is the goal, I’d take someone with a 10 year work and rental history at one place and bad credit over someone with a 750 that’s lived in 9 places in the last 9 years every time.
Her credit could be supbar due to many different reasons, not all being entirely her fault. You are smart to assess risk though. Being a landlord I tend to be lenient on credit and more stern on character and financial stability. Maybe get more info on her job and how long she has been there. At the end of the day we are all human and I have had tenants with perfect credit scores who treated the place worse. Hope this helps and wish you the best of luck! We all need a place to live
Her credit could be supbar due to many different reasons, not all being entirely her fault. You are smart to assess risk though. Being a landlord I tend to be lenient on credit and more stern on character and financial stability. Maybe get more info on her job and how long she has been there. At the end of the day we are all human and I have had tenants with perfect credit scores who treated the place worse. Hope this helps and wish you the best of luck! We all need a place to live
That is my thought too. My wife had credit in the 500s when we started dating due to student loan negligence, but now its in the 800s. As I mentioned above she has solid stable employment, seemed very well put together and honest when I showed her the place and seems like she would really fit into the building. So my only hesitation is the credit. I plan on checking with the current landlord she had been with for 9 years and asking her for proof of 12 month of onetime rent payment.
Looking for advice on a potential tenant. Ran application through rentredi. No criminal or evictions. Has been in same rental for 9 years. Moving b/c landlord is selling duplex and she has always wanted to live in my property. She has emailed me about once a year asking if I have openings. Im lakefront on lake erie and she lived across road. Solid income at 4x rent at a good hospital job. But her credit is bad, 480s bad. Looks like a bunch of small balance credit cards and such. She gave me her current landlords info and permission to contact. If all checks out with him im leaning towards a yes. Should I reconsider?
Looking for advice on a potential tenant. Ran application through rentredi. No criminal or evictions. Has been in same rental for 9 years. Moving b/c landlord is selling duplex and she has always wanted to live in my property. She has emailed me about once a year asking if I have openings. Im lakefront on lake erie and she lived across road. Solid income at 4x rent at a good hospital job. But her credit is bad, 480s bad. Looks like a bunch of small balance credit cards and such. She gave me her current landlords info and permission to contact. If all checks out with him im leaning towards a yes. Should I reconsider?
thanks for the reply. This is my exact concern. I self manage but I feel I also fall into the too nice of a guy.
I originally listed this as a furnished rental trying to target the Mid Term Market. I listed it on Furnished Finder but have not gotten any lead there yet. I put it up on Zillow for 2100 furnished. the last unit I listed unfurnished 3 years ago I got 1400. I got several inquiries for a regular 12 month lease unfurnished even at the 2k price so Im thinking of forgoing the Mid Term Market and just going back to the 12 month unfurnished lease. Part of the reason I was looking at furnished is that the current tenant has the place very well put together and is moving into a furnished house so I have the opportunity to essentially furnish it on the cheap. Now I have only had it listed a week but so far Im not seeing demand for furnished. I should add this is a very unique property as it is on lake erie, has phenomenal views and a private beach. But its in a B to C+ City. A to the east and D/F to the west. So you need the right person who wants to live on the lake, can pay for it, but dosnt mind the non A location.
@Brent Rieman Does this place have any potential as a true STR? It is furnished and near the lake......? Maybe that's another option?
@Brent Rieman Does this place have any potential as a true STR? It is furnished and near the lake......? Maybe that's another option?
It does. Several other places are doing this up and down the lakeshore. My concern is pissing off all my other tenants in the building if I went true STR. I was hoping to go half in with a MTR and then maybe try STR next summer. Im sure i could fill it as a STR in the summer but im not sure about the winter. This unit that is open is a end unit and would be the only one I might get away with as an STR and not piss off all the other tenants, but probably still a few. Its 8 townhouse units. I was thinking to really maximize the cash flow on this id be ideal to do like 5 Long term rentals on the west side and the other 3 as Mid Terms/ STR's and try to put a Mid Term in between the Long terms and STRS. Maybe im over thinking it, but this property too unique to not start making some real money.
@Brent Rieman Does this place have any potential as a true STR? It is furnished and near the lake......? Maybe that's another option?
It does. Several other places are doing this up and down the lakeshore. My concern is pissing off all my other tenants in the building if I went true STR. I was hoping to go half in with a MTR and then maybe try STR next summer. Im sure i could fill it as a STR in the summer but im not sure about the winter. This unit that is open is a end unit and would be the only one I might get away with as an STR and not piss off all the other tenants, but probably still a few. Its 8 townhouse units. I was thinking to really maximize the cash flow on this id be ideal to do like 5 Long term rentals on the west side and the other 3 as Mid Terms/ STR's and try to put a Mid Term in between the Long terms and STRS. Maybe im over thinking it, but this property too unique to not start making some real money.
Actually one of the things I like about this prospective tenant is not only does she have a solid full time job she also has a 2nd job with decent income and she cleans several STR's in the area. Seems like a real hustler who just cant manage credit.
I tend to be a "nice guy" landlord.. I've had it work out with some poor credit applicants. They really mean well, but just can't do better than "scraping by..."
Did she say anything about the credit card deliquencies? Are they more like department store cards indicating that she is splurging on clothes? Maybe her car broke down some time, etc. basically unexpected expenses. I'd be trying to get feeling if she lives beyond her means.
I have a client whose credit started around 480. It was some delinquincies early on, some she claims were wrong, and she is mainly a cash person now. So, the poor credit score is more so due to LACK of credit history.
You say you've been having turnover every couple of years? So, could you do any worse with this applicant if you have no other choices for some reason in this market? Food for thought...
Good luck.
@Brent Rieman Does this place have any potential as a true STR? It is furnished and near the lake......? Maybe that's another option?
It does. Several other places are doing this up and down the lakeshore. My concern is pissing off all my other tenants in the building if I went true STR.
Why the big concern about other tenants being PO'ed? This should ideally never happen, and even worst-case it should only happen once a year.....
I've never had an issue (knock on wood :-) All you need is to have strict requirements for your guests and adhere to them. No last minute reservations, no short stays, no one under 30, etc, etc.....
I tend to be a "nice guy" landlord.. I've had it work out with some poor credit applicants. They really mean well, but just can't do better than "scraping by..."
Did she say anything about the credit card deliquencies? Are they more like department store cards indicating that she is splurging on clothes? Maybe her car broke down some time, etc. basically unexpected expenses. I'd be trying to get feeling if she lives beyond her means.
I have a client whose credit started around 480. It was some delinquincies early on, some she claims were wrong, and she is mainly a cash person now. So, the poor credit score is more so due to LACK of credit history.
You say you've been having turnover every couple of years? So, could you do any worse with this applicant if you have no other choices for some reason in this market? Food for thought...
Good luck.
They seem like small time department store cards that basically just look like she forgot about and a couple in collections. All small sub 500$ stuff. I have 8 units and havnt turned one in 3 years. most of the building is way under market rate rents but they are all tenant I inherited when I bought it in 2016. I was barely scraping by the first few years so I didnt want to risk alot of vacancies but when I re-uped my commercial loan this year to lock it for another 5 my banker really suggested I was way under market rate and if I wanted to get the building valued were I want it I needed to pull up the rents.
@Brent Rieman Does this place have any potential as a true STR? It is furnished and near the lake......? Maybe that's another option?
It does. Several other places are doing this up and down the lakeshore. My concern is pissing off all my other tenants in the building if I went true STR.
Why the big concern about other tenants being PO'ed? This should ideally never happen, and even worst-case it should only happen once a year.....
I've never had an issue (knock on wood :-) All you need is to have strict requirements for your guests and adhere to them. No last minute reservations, no short stays, no one under 30, etc, etc.....
Maybe Im only reading the horror stories. Definitely something I would love to try but not sure I want to risk it sitting mostly empty this winter.
Naw, that won't get you to 480. There is something else she's hiding.
For example I had to do a BK many years back and even that didn't get me that low. Keep looking. Or my advice, just move on.
You can do way better with less risk. Remember why we are in this business - To. Make. Money. Period. This is requiring too much thought and agonizing to be a good deal for you. We're not concerned if this is a good thing for her.
Why the big concern about other tenants being PO'ed? This should ideally never happen, and even worst-case it should only happen once a year.....
Maybe Im only reading the horror stories. Definitely something I would love to try but not sure I want to risk it sitting mostly empty this winter.
You are hearing the worst cases. Start a thread on here and ask how many veteran STR owners have had these issues. It will be minimal because the properties are well run by professionals. Properties that have these problems are run by rookie amateurs.....
There are range of stories out there... So yes, be careful of "sampling error."
Is your rental market not doing well? I would think there are plenty of applicants, granted not always great applicants... No other bites?