All landlords hate vacancies, but they should never compromise their revenue stream at the chance of renting to tenants with marginal, or not existent, credit history. I would rather have a vacancy than take a shot on a guy like Lloyd Christmas:
Often you will get tenants, such as students or young adults, who are renting their first apartment and will have unproven credit. This is not to say they will be non-paying tenants, but extra caution should be taken before renting to them. This is where the co-signer comes into play.
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The Three Most Common Co-Signers
The co-signer is typically a parent who will vouch for their children. I’ve found that there are three types of co-signers:
- Parents who have excellent income, credit history, and are more than willing to co-sign the lease with their children.
- Parents who have excellent income, credit history, and are reluctant to co-sign the lease because they don’t want to be on the hook if one of the roommates destroys the place. Often it is the persistent child who forces the parent to cave in and co-sign the lease and you get your tenant.
- Parents who have decent income and credit history that is awful. Unfortunately, this has happened to me more than once. In this case, the correct move is to take a pass on the tenant. Two tenants with bad credit history do not equal one good tenant. Move on to the next applicant.
Its amazing that in the 21st century, I have even rented to a guy who didn’t have a checkbook. To this guy credit cards and car payments were as complex as brain surgery is to the common man. He had an excellent payment record with his previous long time landlord and all his utility bills were paid on time (and in person with cash). Did I rent to him? Absolutely. Even though he didn’t have a co-signer, his twenty years of outstanding payment history superseded the need for a co-signer.
Does it seem like I’m contracting myself here? I always error on the conservative side when renting to tenants with limited or bad credit. However, don’t reject a tenant because his case is unique.
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