Unique Renter. Would you Rent to Her?

Question

I always turn to this forum for advice, so here we go once more. With a two-level 1115 sqft very upgraded rental there has not been much success in finding quality candidates, of course the property is going on only a month on the market. However, one candidate, a newly college grad with credit scores above 750 applied. She's engaged and her fiance lives in another state and will be joining her. He will be unemployed while he looks for a job. She, herself is also unemployed but stated she receives oil royalties. The application listed her income as $3000 a month. The property is listed at $1600 a month. She brings with her a cat, dog and a bird. I'd love to get peoples input on whether they would take a chance on her or bypass and continue looking.

Lynn McGeein · Answer

Even if she has proof of her royalties, $3000/mo is not enough to qualify for the home in my opinion, especially if she will soon be supporting her unemployed fiance as well.  Then she has pets, which have additional expense eating away at her monthly income as well as potential to ruin your property.  So I would wait for a more qualified person if it were my home.

Billy Hills · Answer

what kind of phone/plan is she one.  This really tells something about someone...Pay as you go or contract.

Michael Seeker · Answer

I agree with @Nicole W. .  Get proof of that income and verify that it is consistent (same in Jan 13 as Jan 14) and not dependent on oil prices or production levels or some other external factors that she cannot control.

In addition, I think the $3K on $1600 rent is pretty slim, I would want to see the persons last 3 mos of bank statements to see if they have some savings built up or if they are living oil check to oil check.

I would not be excited about renting to 2 unemployed adults with 3 different pets.

Account Closed · Answer

@Rick Baggenstoss I definitely plan to look further into the finances. She is currently living in another high rent area, so I've already put an email together asking for more information.

@Bill Gulley I agree with you, but as mentioned you almost have to take into account that she will need to support her fiance and when you add utilities, cost of food, costs for maintaining those pets, gas, car insurance, etc., it does add up very quickly.

Account Closed · Answer

@Nicole W. Michael Seeker - I want to thank all of you for such great input. This is why I enjoy the Biggerpockets  forum so much with its active community. I have to say I agree with everyone that even at $3000 of income, the income to rent ratio makes it very tough especially for the DC area and a student with minor, not major student loans. Also thanks for pointing out that she will need to support her fiance when he moves in for an undetermined length of time while he looks for job. Based on the feedback, unless my verification comes back where additional stable income can be verified, this will have to be a pass as suggested by many of you.

Bryan L. · Answer

I don't rent to people who are "going to get a job".  I got a call a few days ago from someone who lived out of state, but wanted to move back to the town in TN where my property is located.  I asked if they had jobs here.  Her answer, "no, but we won't have any trouble finding jobs - I'm a nurse and my hubby drives trucks".  My reply, find a job here locally, and then I will take your application.

Jerry W. · Answer

@Ian Dodoo , my concern is if they have no jobs now they might get jobs elsewhere and need to move to work them.  if possible I prefer applicants with jobs locally that are secure.  Folks who have jobs a distance away tend to move to them.  there is also the issue of the 3 pets.  If it is not a pet house, that would speed up my no answer.

Ian M. · Answer

@Ian Dodoo If it were me (and this situation has been me in the past), they have to meet the minimum income threshold 2.5-3 x income as @Adam Wenger.  If they don't, but they are otherwise good prospects (as these seem to be), I would get a co signer.  Certainly her fiancee, but that's probably not enough either.  I would ask her to have her parents sign as well.  Just explain the situation about your income requirements (and that she doesn't have a job and is fresh out of college) and you need to have co signers in these situations.

Bill Gulley · Answer

Yes it does add up, but if you just assume what her (their) living expenses will be you're not digging deep enough.

Sit down with her and work with her to see what they will have to live on, there is no way that ratios can explain individual circumstances.

Another point, are these professional types? Student loans indicate they may be.

What does he do? How difficult is it to find work in their line of work?

It's also been well established in lending that Asian borrowers tend to live on much less than us fat, must have it now type Americans, savings is generally higher, just saying, don't apply your personal expectations as to your life style on others, stay neutral and see what their life style is through general conversation.

I'm not trying to push you toward accepting these folks but skimming the top with ratios and assumptions may lead to losing very good tenants.

Those pets probably won't cost a hundred bucks, my two monster dogs were only a hundred bucks.

Again, how long is this situation reasonably expected to exist of relying only on the royalty income? Consider a month to month initially? A 6 month lease with deposits?

As mentioned before, if you work with them and both are employed, you may have a small golden goose there with 3K a month for reinvestment, in 6 months they could provide 18/20K on a rehab for you or maybe a client.

Not enough info here to make a determination, IMO, just guesses and assumptions. I'd suggest you dig deeper :)

Unique Renter. Would you Rent to Her?

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