Rate my Rent To Own applicants!

[BenSanderson]

Hey everyone,

Well, we had our first showing of our Rent To Own property in Cambridge tonight. Things went pretty well: out of 8 appointments, 4 showed up and 3 filled out applications (not bad for a first showing, I suspect).

Nobody really shone above the rest, and everyone had various points (good and bad) that will weigh on our decision, so here`s how they break down:

1. Young couple - no kids, 2 dogs, he`s got a pretty good job (1.5 years there) as a millwright for automotive sector. Girlfriend doesn`t work (or at least didn`t let on that she did). He makes $60,000, and they both seem like good people. The only problem was that they didn`t seem super interested in the house. The only way I got them to fill in an application was by mentioning that they could also find a house through our Realtor that we could then set up as an RTO. This grabbed their interest and they then filled out the application. $5000 down payment available.

2. Older couple - decent, hardworking blue collar common law couple with 7 (yes SEVEN) children, ranging from 2 to 16 years of age. No pets (no room for them?) He`s worked 10 years in a cleaning company and makes about $60,000 a year. They LOVED the house. Pretty good gut feel when talking to them. Oh, did I mention they had SEVEN KIDS?!?! $5000 down payment available.

3. Older separated woman - she seems very nice, but going through a very recent and difficult time separating from her husband. She is taking her three teenage kids with her (2 boys 1 girl), as well as three cocker spaniels. She liked the place and had no problem with the monthly rent amounts. Why? She makes $90,000 as an administrator for a seniors care facility. She would have been the no-brainer candidate except for two concerns. 1 - she has only been at her current employer for 3 months. 2 - her sudden life change has left her with no down payment.

So, this is where we sit - wondering which people (if any) are genuine opportunities, worthy of further consideration.

Any and all thoughts would be greatly appreciated!

 

[DCardona]

QUOTE (BenSanderson @ Nov 5 2009, 10:54 PM) Hey everyone,

Well, we had our first showing of our Rent To Own property in Cambridge tonight. Things went pretty well: out of 8 appointments, 4 showed up and 3 filled out applications (not bad for a first showing, I suspect).

Nobody really shone above the rest, and everyone had various points (good and bad) that will weigh on our decision, so here`s how they break down:

1. Young couple - no kids, 2 dogs, he`s got a pretty good job (1.5 years there) as a millwright for automotive sector. Girlfriend doesn`t work (or at least didn`t let on that she did). He makes $60,000, and they both seem like good people. The only problem was that they didn`t seem super interested in the house. The only way I got them to fill in an application was by mentioning that they could also find a house through our Realtor that we could then set up as an RTO. This grabbed their interest and they then filled out the application. $5000 down payment available.

2. Older couple - decent, hardworking blue collar common law couple with 7 (yes SEVEN) children, ranging from 2 to 16 years of age. No pets (no room for them?) He`s worked 10 years in a cleaning company and makes about $60,000 a year. They LOVED the house. Pretty good gut feel when talking to them. Oh, did I mention they had SEVEN KIDS?!?! $5000 down payment available.

3. Older separated woman - she seems very nice, but going through a very recent and difficult time separating from her husband. She is taking her three teenage kids with her (2 boys 1 girl), as well as three cocker spaniels. She liked the place and had no problem with the monthly rent amounts. Why? She makes $90,000 as an administrator for a seniors care facility. She would have been the no-brainer candidate except for two concerns. 1 - she has only been at her current employer for 3 months. 2 - her sudden life change has left her with no down payment.

So, this is where we sit - wondering which people (if any) are genuine opportunities, worthy of further consideration.

Any and all thoughts would be greatly appreciated!

Hi Ben,

Great turn out, I think the first couple is a great opportunity for you to acquire your second RTO, Third applicant - women with great income is somewhat of a concern given her lack of a downpayment. I would consider looking into her employment a little deeper, has she passed her probation period. Maybe increasing the monthly payment could allow her to fund the $5000 in the next 2-3 months, your risk increases. I`m not sure where the other applicant stands with the 7 kids, is there even enough room?

What`s your e-mail , I would be interested in taking a look at your numbers if possible.

Good Luck

Derek

 

[markl]

Hi Ben,

Need more information what is the value of the home if you put a single earner in there making $60k will they qualify at the end of the term with interest rates of 6%? What is the rent your trying to obtain? We can make judgement calls on the applicants but it comes down to hard numbers do they have other debts?

But some questions anyhow #3 I am not a proponent of ever putting someone in without a down payment I have done it in the past and have gotten burned. If she is earning $90k at her new place of employment what was she doing before does she have a track record of earning? If so even if she is out of the job she is more likely to get another at the same level. Up to you regarding the DP it is your property and you have to be the one to feel comfortable.

#1 take your time qualify them and let them go shopping

#2 7 kids - do they have other debt will they be able to make the payments? I would ask for their expenses. Drop by their current property to see the condition it is in. 7 kids I would imagine the wear and tear would be quite high. What is their credit situation?

Good Luck

 

[GoRentFreeFast]

Hi Ben,
Here are the minimum each of our LTO applicants much have...

1. Must be an applicant and a co applicant (don’t care if they are married, friends, brother and sister...we need two people on the app)

2. Two years sustained employment at the same place (we check)

3. Minimum of $60,000 household income (need 2 year NOA)

4. No bankruptcies within the last two years (we pull credit)

5. Sometimes we require bank statements for the last two years

6. $3000-$5000 minimum deposit



Hope this assist you in your process...best of luck.



Philip

 

[BenSanderson]

Thanks everyone for the comments and advice.

I think the high-income woman is a no go, so that leaves us with two.

The young couple would need to be pre-qualified for a `tenant first` RTO setup, so we`ll proceed to do that for them.

This leaves us with the `hockey team`. The next step will be to get the wife to fill out an application and then provide us with all their expenses and various sources of income. If the math works (and there are no red flags), then they might fit the bill just fine.

 

[invst4profit]

Considering the fact that in normal RTO arrangements a high number of deals never conclude with a purchase you are taking a very high risk with the family with 7 kids.
If, and I do say if, the deal falls through and they walk away at the end you may be faced with considerable cost to repair the damage and bring the property back up to saleable condition. You will definitely lose money on them.
I would definitely not consider them for a RTO.

Actually I would not consider any of the applicants to be acceptable.
The young couple are going to vanish into the wind and the woman with no down payment or employment history and three teenagers and three dogs is a joke.