Young, Income = Expense, Red flag?

Question

Hi, Young boy and girl friends tenants  planning to move-in together.  Both know each other for many years, in stable job for more than 1.5 years, together make 3x rental.   They have no savings and last 6 months bank statements show income= Expense every month.

Girl: 700+ credit score, moving out of parents home and no loans.

Boy: 590 credit score and sharing rent with friends now.

No savings to cover for deposit+rental before move-in... Red flag?

Thanks.

Eliott Elias · Answer

I don't rent to couples who aren't married, emotional decisions can be made and put me in a bad position.

Adam Martin · Answer

If they don’t have the deposit and first month rent then they are not even getting a showing.  There are a lot of red flags here and this is one to run from.  I prescreen everyone through the phone and tell them to let me know when they have funds ready. I used to say nobody ever reached back out but one just did.  Still low odds and there are too many qualified people.  If you live at home and work where did that money go and what is changing with their spending habits to afford rent now.  Be patient you are significantly better off with no rent coming in through vacancy than you are through non paying tenants.

Richard F. · Answer

Aloha,

Get one or more Parents to co-sign if everything else is good. Of course, run credit report on the Parent(s) that agree to sign. If they have credit issues, or are otherwise unstable, then pass.

Theresa Harris · Answer

If they can't do a deposit before moving in and come up with first month's rent, don't rent to them.  Many young people who are starting out won't have a lot of savings and may not be great at managing their money right out of college/university.  Not all of them, but quite a few. They are used to their parents footing the bill.  For the girl, the fact that she was living with her parents and has no loans (good) and no savings (worrying) is more of a concern.

Bruce Woodruff · Answer

I'd pass, there must be better prospects out there, right?

Jeff S. · Answer

@Srinivas Prasad I would take the most responsible one, probably the girl since her credit is best, and let her know she is responsible for everything. She needs to collect and pay the rent no split rent. If he flakes out it is up to her to find a new roommate. If necessary her parents can cosign.

Srinivas Prasad · Answer

Thanks for all the inputs.  Along with credit reports, do you ask for bank statements or funding source or cash flows during initial tenant screening itself or as a follow-up?

Young, Income = Expense, Red flag?

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