Credit score 622- collection, can prepay, would you rent to her?

Question

Hi guys,

I was wondering if you please would be so kind and help me out!

I have a prospective tenant, single mom who owns her own business with her ex husband.

Her credit score is 622. But, she has few accounts, mostly medical bills in collection. (I am not sure how its possible to have a collection open and have a credit score of 622. I called the screening company and they said that sometimes medical bills dont count against credit score)

The amounts that are in collection are small, one k, 278$, small amounts, but there are like 14 of them...

She said they opened a second business (restaurant) and it did not go well, they had to close it, that is why she fell behind on her bills but she is working on it because she wants in the future to expand her business..

She says in her business she makes 12K per month and saving money for business expansion.

She says she can prepay for 4 months (2.5K rent per month, so its 10K plus 2K security deposit)

Would you rent it to her?

I really need that 10K...If it was not for the bills in collection, it would be a no brainer to me...

Nathan Gesner · Answer

I discount medical collections, but the rest I would definitely count. I won't rent to someone with more than three collections. If she makes enough money to prepay four months of rent, then she should use that money to pay her debts before she tries incurring new ones. It's also a red flag that her business is with her ex-husband.Based on what you've shared, I would not rent to her unless she paid the entire year in advance.

Jeroh Odafe · Answer

@Mary Jay it is literally very risky. If she wants to do a 1 year lease and pays 4 months up front, you just might never get the remaining 8 months rent. Then you'll have to spend more money evicting her.

Mary Jay · Answer

thank you guys so much!

Jerel Ehlert · Answer

Check your state and local laws on use of credit reports. FOR RENTAL, the only thing you really need on a credit report is current bankruptcies and evictions within the last 3-5 years. The scores themselves are not a valid prediction of paying rent and there's strong racial and gender bias baked into the score. If you (foolishly) use the credit report, ignore all medical and student loan debt because these are less than voluntarily incurred (I don't care about your politics).Verifiable income (to their personal account) and pay stubs are more valid indicator of *ability* to pay rent.Major warning sign to pre-pay rent months in advance without a STRONG reason to do so (i.e., rent comes from student loans for a semester at a time). Consider: there are lease violations not related to payment, and you need to evict. You are required to return unearned rent (with a duty to relet to mitigate damages, not just let it sit empty) and unused deposit (that's not your money). For lease violations, you can refuse to accept rent and move to eviction. Pre-payment just creates more problems with a problematic tenant.

Bruce Lynn · Answer

My #1 question would be what is she putting in the bank monthly or what was on the W2 for 2021. Does it make sense to you?No story about I don't take a salary, or I maximize business expenses to lower my W2 or whatever the excuse is. I want to see steady income going in the bank account....like a regular paycheck that is about 3x to 4x the rent.I'm not thrilled with running a business with the X. I would think the % of people that make that work for very long are pretty slim.If you take her can you get double deposit from her and the two months rent, vs 1 month deposit and 4 months rent. Same money today, but that protects you better in the future.

Mary Jay · Answer

Thank u sir!Just to understand things better May I ask you please:What is the difference between doing a four months lease and then if she does not pay evicting her Vsdoing a one year lease and then in four months if She dries not pay evicting her?

Mary Jay · Answer

Thank u!

Richard Sparr · Answer

Why not just do a 4 month lease? You really need 10k and someone is offering you 10k. She prepays the entire thing day 1 and then if she comes up with more money in 3 months you can sign her to another short term lease. If it’s not looking great, you start looking for a tenant. And while I’m a real estate attorney in Texas this is obviously not legal advice. Many states have various laws on how much you can pre pay or might require the landlord to hold the “rent” in an account and prevent it from being used day 1. Some states might not even allow this arrangement.

Mary Jay · Answer

thank you so much, sir!Why do you not like the prepaid rent?

Mary Jay · Answer

thank you so much, sir!