All Forum Posts by: Peter Sinclair

 “So what?” Lol You make it seem as if the eviction process is simple, free, and not time consuming! 

While I don’t expect my tenants to stay forever,  I do expect them to make their rent payment on time and in full. Job history is an important peice of evidence in assessing such risk. Yes, a person working 30 years can be fired or layed off just as easily as someone working for 3 months... however, their history proves that this is unlikely.. meaning less risk. 

So, while taking a big sum partially mitigates the current years risk, it doesn’t tell me she’ll make a good tenant later. But a long working history does tell me she was respondsible enough to keep her job for said such amount of time. 

 “Has a joint credit card with a $13,000 limit that has $13,600 on it currently and is 30 days past due.” - OP

I took it literally.. I don’t know how you confused it for a truck payment.. 

Her job is important... the OP stated that she didn’t provide proof yet.. so going off someone’s word is ill advised.. Also, what happens at the end of the lease; When she needs to make monthly payments? Wouldn’t the job be important then? When screening a tenant you have to look beyond the now and assess for the future! 

 Well... DUH! A person who doesn’t pay their debts isn’t profitable! 

“That’s why people who pay lots of credit card interest can get high credit score...” - Ihe O 

If this were true, why do people with bad credit have higher interests rates? From your logic, people with higher scores would have higher interests rates.... Dont believe me? Here’s a simple infographic that was formed using just such data. 

Net worth doesn’t have a direct correlation to the ability for one to repay a debt. For example, I can own 100 acres of undeveloped land deemed to be worth 7 million dollars. But I’m 18 year old high-school dropout with no job and a maxed out credit card that I used to go visit my future wife that is locked up in Puerto Rico for drug smuggling. In this scenario, my net worth has nothing to do with my ability to repay. 

So, net worth doesn’t have as huge a bearing as you want to believe! 

While I don’t recommend making decisions based on anecdotal information, sometimes it helps to know what’s happened with others in the same situation.

My first duplex I rented to a family that offered to pay a full years worth of rent. The place was a 2bd/1.5 bathroom for $2100 a month. My minimum requirements are a 650 credit score, minimum $4200 household income, and clean background check. Their reason for paying in full was they saved up while living with family, and did not have any rental history or and the husband was not a US citizen. Credit report for the wife was clean (score of 700ish) and had a history of paying their car payment regularly for past 2 years. The husband and wife background came back clean. The husband could not provide income proof, as he was often paid in cash, but the wife showed a stable job history with decent pay.

After weighing this information, I accepted their application and we signed a year lease. Their lease would also become month to month when it expired. I used the years worth of rent and applied it to the principle only on the mortgage. After their lease ended I also marked up the rent by 5% to stay close to the current market prices. 

They were basic tenants that never complained about anything, except that the hot water temp was too high.   They also moved in extra family members and a pet (which was against their lease). I didn’t make a fuss of things because 1) the utilities that I covered remained consistent and didn’t cost me more, and 2) neighbors didn’t complain about the dog. After 14 months of renting they moved out due to an expanding family. I ended up deducting $781 from their security to deposit to make certain repairs, having the unit cleaned, and to have the place fumigated as they infested the unit with roaches. 

Pretty boring story huh? Lol 

Ultimately, its your decision and investment. With every renter comes a gamble, its your job to mitigate the risks as much as possible. My suggestion is to look beyond the tenants situation and just focus on the facts at hand. If her work history is pretty stable, she actually can pay the rent in advance, and her story checks out.. move ahead and just get things taken care of. 

What makes you think I didn’t consider the whole picture? 

I see a bankrupt applicant with maxed out credit cards, but supposedly has $60k in the bank (not yet proven). She makes $1700 a month, but how much of this is is actually leftover, and is enough leftover to pay for rent? Its not stated. She may get awarded alimony but until then cant be proven. 

What did I miss? 

Here is some info I found on your place that may help you with your decision

Hit up your RE agent and ask her/him to get you the info you need such as current rents, operating costs and expenditures, and lease information (month to month, year long, etc). 

I’ll play the devil’s advocate :) 

What happens to your stragtegic debt if the economy crashes again and the renters you relied on loses their jobs. Whose gonna pay for that mortgage then? 

My argument isn’t about taking on debt.. it’s analysizing ones ability to make their debt payments. 

Credit scores are a tool used to determine how likely someone is to default on a debt. So when we see someone with a credit score of 800, we can assume that this person is not as likely to default on their debt compared to someone with a credit score of 650. Its a tool used to quantify risk.

It can be said that rent can be comparable to one’s debt payment, ie: mortgage payment vs rental payment, both need to be paid if you want a place to live. So, your statement that credit score has nothing to do with the likelihood of the tenant continuing to pay rent isn’t entirely true. Credit score is one many factors to consider when renting to a tenant, but not an the only thing to consider. It must be taken in consideration with ones job history, income, and other influencing, financial attributions. 

https://www.angieslist.com/articles/dont-get-ripped-how-fight-bad-contractor.htm

I found this... there’s some good advice in the article.