Renting to Tenants with no prior rental history

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Renting to Tenants with no prior rental history

Nicolas Chambers
Investor · Bellevue, WA · Member since 2014 · 7 posts · 2 votes

Curious as to what your policy is for renting to tenants with no prior rental history (3 years out of high school, they're not trying to hide anything). 

Background:

Newly engaged 

One is an Electrical apprentice (1 year w/ current company, 2 years with prior company)

The other a Barista (3 years with same company)

Good credit.

Dual income is equal to 3.5x the monthly rent (assuming barista is including her tips in this figure)

They have savings. 

Have heard/ read, double just the double the deposit. 

Thanks in advance for any input.

-Nic

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Christopher Blanco
Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes
9y

Do a background check, if they come out clean and meet all your requirements better than any other tenant I would go for it. I would feel better if they were newly married, though. 

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    Yes these conditions are common.  In Calif, we can't charge extra deposits.

    Verify employment of both, get a bank statement from each and sign the lease IMO.

    1Reply
  • Christopher Blanco
    Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes
    9y

    Do a background check, if they come out clean and meet all your requirements better than any other tenant I would go for it. I would feel better if they were newly married, though. 

    2Reply
  • Nicolas Chambers
    OP
    Investor · Bellevue, WA · Member since 2014 · 7 posts · 2 votes
    9y

    Great! Thank you both!

    0Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y

    First+Last+Deposit if they meet your rental criteria. Easy as pie. 

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    9y
    All of the above and I also do Google search on them. I have called personal references not often but I have called neighbors in some instances like this.
    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    9y

    First, last, and a deposit equal to a months rent for any applicant that is considered higher risk. (Notice I said, "higher" and not "high")

    I have a score sheet and award scores based on credit, income, length if employment, landlord references, etc. If the score below 16, I don't rent to them. 16-20 they pay a deposit of two month's rent. 21-25 they pay a deposit equal to 1.5 months rent. 26 and up they pay a deposit equal to one months rent.

    I process hundreds of applications every year. About 80% of my applicants score 26 or better. 15% pay a higher fee and about 5% fail and we refuse to rent to them. The reason we have so few fail or pay a higher deposit is that people know we have the strictest standards in the area.  Bad tenants avoid us like the plague which is exactly what we want!

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    I would try to find someone with a better past record. Their situation is sketchy . Give a little time, couple more weeks as it is still early for June rental. 

    Pull their credit history/score and see where they stand, this may decide.

    0Reply
  • Brad Russo
    Professional · San Francisco, CA · Member since 2016 · 124 posts · 31 votes
    9y

    Yeah, try to check their credit/baclground reports, look over their e-profiles in social networks, try to find something that can confuse you. Until you have no doubts, I would suggest you to continue searching. For tenant screening use Experian or TransUnion. 

    1Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    9y

    @Nicolas Chambers,

    I'm sorry if I'm missing something, but they pass your criteria, have steady jobs and are dependable.   An electrician and barista can work anywhere, so even if one did lose their job, it's not hard for them to get a new one.    As long as their credit score comes back clean, and they haven't missed a payment, I don't see any red flags.      

    1) Increase late fee, or even better--  set up the lease where they get a discount if paid via the first.    

    2) Require a co-signer

    3) Up the security deposit

    0Reply
  • Chuy Gonzalez
    Investor · Long Beach, CA · Member since 2012 · 313 posts · 190 votes
    9y

    I've done 2x security deposit for iffy people before, but regretted it. I'll just wait for a tenant that meets my criteria if i have to.

    1Reply
  • Justin B.
    Investor · Gaithersburg, MD · Member since 2013 · 659 posts · 441 votes
    9y

    Well, everyone has to start somewhere.  The vast majority of these folks are young and fresh out of school.  If you do a background check, verify income, and everything else looks good, it wouldn't phase me to rent to someone like that.  There are plenty of good reasons for not having a rental history, just do your normal due diligence and if everything says they should be able to pay, I don't see any issues.

    2Reply
  • Account Closed
    Saint Paul, MN · Member since 2017 · 18 posts · 10 votes
    9y

    I would look at their income-debt ratio and work references. If needed, get another adult to be on the lease with them as a guarantee of rent payment. But do not NOT rent to them just because they have no rental history. We ALL had to start somewhere somehow. 

    1Reply
  • Nicolas Chambers
    OP
    Investor · Bellevue, WA · Member since 2014 · 7 posts · 2 votes
    9y

    Very helpful - thank you everyone.

    1Reply
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