Should I rent to this tenant?

[shusarik]

I have a family of four who`ve applied to rent a smaller single family property I own.

In 2009 the husband was hurt at work and it took several month`s for his disability payments to kick in. The family fell behind on their bills, and declared bankruptcy in the summer of `09. After running credit checks on both applicants, it revealed that they`ve also lived at four different addresses within the past 12 months. This to me raises a red flag, especially since they have two young children (ages 1 and 6); so I`m planning to have my leasing agent speak to them about this.

Their credit is terrible, that`s no surprise. But they are a good family, and they do have a co-signer for the lease. Has anyone encountered situations like this before, where an applicant would essentially only be approved based on the strength of the co-signer? If so, did it turn out well, or the opposite?

My concern is if they`ve had a track record of poor payment history, even if they do have a co-signer, it`d still be a huge inconvenience to try and collect the rent each month if they don`t have it on time.

Your thoughts?

Thanks in advance!

Steve

 

[vandriani]

Steve,

Talk to the landlords previous to the last one. They have no vested interest in this tenant. It may give you an idea of payment history prior to the injury.

 

[invst4profit]

Don`t wast your time any farther with them. 4 moves in 12 months means you can only expect them to stay 3 months before moving again. They probably only pay first and last and then never pay again.
If you really want to rent to these people insist on having the names of all 4 previous LLs and make sure you call and confirm every one is legitimate.
Again I would pass so as not to have a vacancy through the winter.

 

[christineruptash]

The fact that they have had 4 addresses in the last year isn`t a good data point, on top of their credit history. The real question is "Are you going to be able to evict a family if you need to?" Here is my own experience……

My PM and I served a family of 7 (5 kids including a 3 month old…) with an eviction notice, trust me, it wasn`t a high point for either one of us. There were a lot of other factors, this was an ongoing issue and would collect rent weekly by this point. The good note, they ended up being able to pay their rent in full, and moved out 6 months later on their own accord and the property was immaculate. The bad side – there was a considerable amount of time and energy devoted to this one property and I didn`t have the heart to charge them any late fees.

This ended up working out for us, but, we had good payment history with them prior to this, an amazing property manager, and excellent tenants who truly wanted to stay in their home and did everything in their power to make that possible.

So to make a long story short - if you are satisfied with the co-signer, their references are `real` and check out, and you still want to give them a chance (are they your only option?), be prepared that they will take up more of your time at the very least. The worst - you may have to do an eviction, possibly not receive your full revenue and hope your property is in good shape at the end. Throw in whatever your gut is saying and you will have your answer.

 

[JBagorio]

The fact that this family have move 4 times in within a year...you called it. It is a red flag and enough to turn me off if I were you.

As a side note the other way you could have done it before the credit check (which is what I normally ask during my interview) is to ask them how many times they have moved in the past 3 years. If they can provide the addresses as well would be good. If they were hiding anything they might not mention the multiple moves in such a sort time, and if they have disclosed the moves and where then at least there is the likeliness that they are being truthful.

Having access to their previous LL as their reference is also a good indication…just be aware of fake or their friends as the pretending landlord. There is many ways you could determine this situations…

 

[invst4profit]

So to make a long story short - if you are satisfied with the co-signer, their references are `real` and check out, and you still want to give them a chance (are they your only option?), be prepared that they will take up more of your time at the very least. The worst - you may have to do an eviction, possibly not receive your full revenue and hope your property is in good shape at the end. Throw in whatever your gut is saying and you will have your answer.




What would be your motivation to run a business this way?

Giving people a "chance" is the bases for operating a charity not a business. When evaluating potential tenants if they do not measure up to responsible business standards do not give them a second thought. Same goes for evictions.
Someone else with less experience will always be there to take them in.
I am somewhat surprised, considering what you went through with your dead beat tenants, that you have not tightened up your screening process. It sounds a little like your heart is not in the business. Or maybe your heart is just getting a little in the way of your business.

 

[shusarik]

I did some more digging into the four addresses, and they did provide explanations as follows:

- The current house they live in is being sold, and the owner confirmed he wants to have it vacant for this.
- The couple split up last year for a few months, and as a result each of them lived in different addresses.
- The fourth address had issues with mold, and they moved out after a short period of time. They paid a fee to break the lease.

They do have a daughter attending a school nearby, which leads me to believe they want some stability. I guess at the end of the day it comes down to whether having a co-signer offers enough "protection" to make up for their poor credit history. It is a business, and any failure to pay rent should result in the same treatment, as tough as that might be at times.

 

[invst4profit]

Unless there explanations can be confirmed by there previous LLs I would assume they are all BS.

Also keep in mind a co-signer does not guarantee they will stay in your unit only that you will get paid while they are there. Taking a risk could still end up with you looking for a new tenant in the middle of the winter.
Based on my past experiences with this type of situation the likelihood is this guy will be unable to find anyone willing to co-sign anyway.

 

[UTCVenturesLtd]

QUOTE (shusarik @ Nov 18 2009, 09:50 AM) I did some more digging into the four addresses, and they did provide explanations as follows:

- The current house they live in is being sold, and the owner confirmed he wants to have it vacant for this.
- The couple split up last year for a few months, and as a result each of them lived in different addresses.
- The fourth address had issues with mold, and they moved out after a short period of time. They paid a fee to break the lease.

They do have a daughter attending a school nearby, which leads me to believe they want some stability. I guess at the end of the day it comes down to whether having a co-signer offers enough "protection" to make up for their poor credit history. It is a business, and any failure to pay rent should result in the same treatment, as tough as that might be at times.

Hi Steve,
They have messed themselves up with having the poor credit history in the first place. People don`t change overnight! I am in the middle of financing a house for my inlaws... They have missed 4 months of payments in a little over a year!!! In my case, the house was only $12k so it is not a big deal and they will eventually have it paid off one day! They also had a history of financial woes that i knew about. I figured that if worse came to worse, i could always sell the property for three times the price that i paid for it, so i could be more lenient with them.
The best that you can do is not to put yourself in a precarious position in the first place. If anything, rent it to the cosigner and let him collect his money from those people. Then you will see where the rubber meets the road!
Uncle Dean

 

[writeabooknow]

You are in the business of providing a service to those who can both afford it and willlingly pay for it, with the added benefit of being a long-term client who can help increase appreciation.

You are not in the business of uplifting the downtrodden.

That last line took me six years, three tenants, untold sleepless nights with regret and thousands of dollars to get through my thick head.

Cheers,

Steve Manning