Renting to an Iffy Tenant
Hello all, As a first-time landlord, I sorely need the advice of some old hands. I have two prospective tenants who have poor credit (each below 600), lots of debt and what seems to be a tangled credit history. However, I’m considering them because they offered to pay the year’s rent in advance. How badly…
Hello all,
As a first-time landlord, I sorely need the advice of some old hands.
I have two prospective tenants who have poor credit (each below 600), lots of debt and what seems to be a tangled credit history. However, I’m considering them because they offered to pay the year’s rent in advance.
How badly could this possibly go wrong, if I have all the rent in hand? I’m admittedly pretty naive about all this, so what would you do?
Thanks in advance!
I don’t think that bad credit is a red flag as much as it’s a conversation to have, as Bohuma states. My credit has often been less than stellar, and I have occasionally carried a lot of debt, and yet I always paid my rent on time.
It’s the rent in advance thing that gets me. Not the bad credit.
I moved to the US in 2004, I didn’t have a credit rating for six months then it was 520 – 600 for two years until American Express decided it would put 1989 as the date I opened my account (I had an Amex in my country of origin), bingo my credit score went straight to 720.
One third of people in the US with a family member diagnosed with cancer end up declaring bankruptcy, and a large numbe of those that don’t end up with lousy credit. And most of these people have good health insurance.
I would want to know why their credit score is in the 500’s. I would want references from past landlords (phone the landlord), and background and housing court checks.
Most of all you need good tenants who pay the rent on time, don’t damage your property, are respectful of their neighbors, and adhere to all the provisions of the lease.
Money upfront is nice but don’t let it blind you to possible problems. The above advice is solid, but critically go to housing court and run some checks. Having run through the eviction process it is mind blowingly painful and you will wonder why you ever bother being a landlord. Evictions take a long time, money and emotional wrangling. Do yourself a favour and get completely comfortable with future tenants. Credit checks / housing court / interviews.
i would take them if they pay by certified check for one year in advance.
Just do a criminal background check first and give a one year lease only. you can always renew under the same conditions.
Check their id to make sure they are who they say.
when i first saw this post – i immediately thought ‘pacific heights’.
however, we are in a reccession and i know alot of great folks whose credit has faultered b/c of uncontrollable situations. they are getting back on track, due to unexpected job losses and loss of income. so for me, i would need to have ‘good’ feeling about their story and go with my gut.
i also like the idea of taking part of the funds as a security deposit.
In Japan and Korea (and for all I know, other parts of Asia) it’s common to pay rent in annual payments. I had a Korean Pratt student’s mom attempt to pay me for a year in advance. I didn’t accept it because to me, it was simply an alien idea.
I’ve since been informed it’s also traditional to really give the landlord a hard time regarding tiny details, like wobbly doorknobs or spots of paint on the floor before forking over the annual check.
I took the tenant, demanded monthly payments and outside of the tenant’s noisy late-night phone sex career, she was fine to deal with.
If it feels wrong, it is. Also, for a year’s rent up front – it’d be spent by March around here. I like getting paid every month, it keeps me honest, too.
A lot of rent upfront is a real red flag. Where they got that money if they’ve got bad credit aside… this setup games the landlord/tenant relationship.
You don’t merely want x amount of cash. You want a social contract.
Someone who wants to pony up a lot upfront is, in a weird way, telegraphing a future lapse or transgression, and doing it in a way that undervalues the social contract in favor of the bottom line. It is not difficult to imagine the pause you’ll take later when this tenant starts to gently fuck with you about little things, because, after all, you’ve gotten paid in advance. And it’s not hard to imagine how far out of hand this testing behavior can go, either.
Alternately, you’re dealing with someone who’s got so many hangups about money that they feel like they need to protect you from them.
I wouldn’t want to rent to either of these folks. I want to rent to people who have basically healthy attitudes about money and business.
We rented to a guy like this once. Instead of taking the year’s rent he offered, though, we collected security equivalent to 6 months’ rent We figured that would be more or less the amount of time we’d need to evict him, if it came to that. And, we would learn sooner rather than later if he was going to pay his rent and on time.
He wasn’t a total disaster, but we grew tired of chasing him for the rent and he moved out without incident at the end of year two. If memory serves, he got almost all of his security back.
Good luck.