leasing to a bunch of friends/co-workers

[Pavan Kovvuri]

Hi folks,

I received an application where 4 people who work at the same office would like to rent my SFH. They all applied. credit scores are low but combined income is much greater than rent. No criminal or Eviction history.

are there any downsides?

Thanks in advance.

[Nathan Gesner]

Don't do it.

When unrelated people rent together, there is a high probability of increased problems, to include people moving out early because of personal fights, new relationships, loss of job, etc. You can also expect a high probability that the entire "friendship" will break down and they will want to end the lease early. Or they'll move one or more tenants out and then look for replacements so they can afford the rent. Don't turn your rental into a revolving door.

I have a policy of not renting to more than two unrelated people unless they meet higher standards. This includes every individual having a credit score over 650 and every individual must make 2x the rent. If three friends rent together, they would have a combined income of 6x the rent. This ensures it's still affordable even if one person leaves. Since instituting this policy, I rarely have three or more unrelated people rent together. When they do, they are excellent renters.

I once had five friends apply to rent a 5bed/3bath home. They made a combined income of 5x the rent. However, I discovered one of them made 3x the rent, two of them made 1x the rent, and two of them had not been employed for over a year. Can you imagine if the guy making 3x the rent decided he was tired of the free-loaders and decided to leave? I'd be stuck with four renters that make a combined income of 2x the rent!