Hi BP Community, First and foremost - thanks for reading this. It means a lot to someone like myself who has just recently started on his journey. I'll cut to the chase. From all of the applicants I have for this SFH, I am gravitating towards this particular family the most. The good: • Good income - 4-5X monthly rent • Good impression/communication • Stable jobs • About 2X move-in funds available in the bank • Good credit scores The bad: • Bankruptcy in 2009 • They're being foreclosed on their current house that they're moving out of • Credit Card debt roughly equal to the amount saved in the bank (Their explanation: they paid for a month of tuition on the credit card) I know many people would never rent to someone who had a bankruptcy, but it was in 2009. They explained to me that it was because their business failed and they had no other option. I think they will be able to pay on time given their income despite everything else. However, I would love your input! Thanks!

if there foreclosure has taken all this time since there bankruptcy.. then they have lived for free for what almost a decade and they still have no real cash... think about that

If they can't afford their current mortgage, what make you think they can afford their rent? Send them to a debt counselor, so they can get their finances in order. Unless you're into helping charity cases, AVOID!

I agree with @Laticia Braxton. Also, do you have a policy and procedure manual in place? I find its helpful to have one so that in a case like this you can reference your criteria instead of making a decision based off of emotion. It also protects you from discrimination allegations if you make your decisions based off your criteria.

@Alek Liskov , if you do rent to them, you will regret it almost immediately. Choose another tenant. Unless you want to experience firsthand the eviction process.

How can they possibly have good credit scores if they are involved in a current foreclosure? This would hit their scores down to nothing. Also, having credit card debt would ding it down as well. Did you see the actual score? Something sounds weird.

@Alek Liskov the bankruptcy is the least of your concerns. You are assuming ability to pay means you will get paid, but that only applies to responsible people. They haven't paid a monthly housing expense for months or years. If they make $7-9k per month and all the cash they have saved is $3000 with NO housing expense, that is horrible! They should have way more cash. Just because they are nice doesn't mean they will suddenly become responsible. In fact the best liars and con artists are the nicest people you will meet. And don't believe your lease protects you. The best protection is selecting the right tenant. Evictions can be long and costly. I have rented to people with bankruptcy and foreclosure but only after they have gotten back on their feet and have a good rental history. You don't want to be the one that has to train them how to manage their money.

Most of my tenants have been bankrupt or foreclosed on. If they had great credit they would buy a house and not rent. With a 650+ credit score, 2 years on the job and fog a mirror anyone can get a mortgage. If your prospects have a good, stable job and income, they have a better chance of staying awhile. I would get a larger deposit and set up an automatic payment plan. Don't ever let them be late. People are creatures of habit and a large number of individuals that go bankrupt often do so again. Get a pay or quit letter, file it on the 5th and learn eviction procedures. Don't even think about "working with them" if they are late. Good luck

@Alek Liskov I would not have a problem renting to them if they are not currently in bankruptcy. I also accept people who have had foreclosures if they have good steady jobs and. No other delinquencies. In addition, onawst ask for first, last and security. I go back to the heydays of foreclosures, and we sure would not have been able to fill our vacancies if we didn't work something out with these folks

I think the issue is money management. Bankruptcy in 2009 and a foreclosure 7 years later. We all have had issues, but YOU don't have to be the person to help them resolve their issues. There are non-profits and shelters designed to do that.

45
Posts: 15
Votes

Alek LiskovPoster

Investor
Clifton, NJ

General Landlording & Rental Properties

A Bankruptcy and Being Foreclosed On - Should I rent to them?

Alek LiskovPoster

Investor
Clifton, NJ

Posted June 21, 2017 09:07

Hi BP Community,

First and foremost - thanks for reading this. It means a lot to someone like myself who has just recently started on his journey.

I'll cut to the chase. From all of the applicants I have for this SFH, I am gravitating towards this particular family the most.

The good:

Good income - 4-5X monthly rent
Good impression/communication
Stable jobs
About 2X move-in funds available in the bank
Good credit scores

The bad:

Bankruptcy in 2009
They're being foreclosed on their current house that they're moving out of
Credit Card debt roughly equal to the amount saved in the bank (Their explanation: they paid for a month of tuition on the credit card)

I know many people would never rent to someone who had a bankruptcy, but it was in 2009. They explained to me that it was because their business failed and they had no other option. I think they will be able to pay on time given their income despite everything else. However, I would love your input!

Thanks!

0 Votes

25 Replies

Jump to Last Reply

Most Popular Reply

10,267
Posts: 16,142
Votes

Steve Vaughan

#1 Personal Finance Contributor

Rental Property Investor
East Wenatchee, WA

Steve Vaughan

#1 Personal Finance Contributor

Rental Property Investor
East Wenatchee, WA

Replied June 21, 2017 19:34

A bk and a foreclosure? Only if they smoke and have 5 cats. At least 2 males that aren't fixed!

Seriously though, no. Foreclosure is an eviction on steroids. They sat there and did nothing. Not a short sale. No a deed in lieu. Imagine trying to get them out when they decide to not pay you. Can't threaten to damage their credit! Nothing to lose for them.

5 Votes

Sort By:

Oldest

Loading replies...

Struggling to find reliable real estate advice?

Join over 3 million real estate investors to build connections, learn from others, and share your journey — all for free!

Your Profile Views

Curious to see who's interested in your profile? Unlock your views with Pro

Connect with others

7 day free trial. Cancel anytime.

PRO

Upgrade to Pro

Market Finder - key investor metrics for all US markets

Deal Finder - investor-focused filters and notifications for new properties

Calculators - Unlimited access to 9+ property analysis calculators

Find an Agent

Find & Match With an Investment Friendly Real Estate Agent

Enter your market to get started

Rent Estimator

Address or ZIP