How do you assess young applicants?

Question

My rental is in an older, lower middle class neighborhood with houses under 1000 sq ft. Being such, most of my applicants are early to mid 20's with maybe a high school education.

Being so young, many times the have no rental history (first time on their own) or are on their first rental. In addition employment history is also short, no credit etc.

Ideally, I would like to rent to someone with solid work and rental histories but with my applicant pool most times this won't be possible.

I've owned the property for 3 years and my first tenant was a first time renter with a good job. We gave him a chance based on his job and our interview with him. He turned out to be a great tenant, but in the end got mixed up with the wrong girl. He always paid the rent in advance, and verified anything with us that he wasn't sure about. 1 1/2 years into his tenancy he moved in a girlfriend from hell who was a professional tenant without our knowledge. It's a long story, but even though it did not end well, I would still give him a good reference because he never gave me any problems, he was just naive and got himself into an impossible situation before he knew what was coming.

Now I have a couple in their mid 20's with a young child. It appears that the husband works for his father in law, and that they all currently live with her parents. They are 25 and 27 and have only rented one place for a total of 8 months.

When dealing with younger applicants what do you go on? Beyond the obvious -no record, evictions etc - How do you decide whether they are a good risk or not? Anything special you look/watch out for?

It seems every one has a "story"...

George Paiva · Answer

Yep same in my book.

Jerry W. · Answer

Every state has different landlord/tenant laws so my thoughts on this matter may not be correct in California, but generally being young is not a protected class for purposes of claiming discrimination.  Most of the claims for discrimination are for older persons.   @Karen Margrave  I am sure knows California law much better than me, but I have never heard of a lawsuit for discriminating because someone is too young.  I have seen quite a few lawsuits for people who were discriminated against because of advanced age.

Karen Margrave · Answer

Answer:  The EXACT same way you qualify other tenants. I'm not being a wise acre, but if you were to use different criteria, you would be opening yourself to a discrimination lawsuit. Therefore; figure out what your criteria is, be it a co-signor or ? whatever you do, do it consistently with ALL tenants. It might be a good idea to seek out a consultation with a real estate attorney. (As a licensed agent I'm probably a little more sensitive to this stuff than others might be) Hope this helps.

Roy N. · Answer

@Angie W.

In my understanding there is a difference between a co-signer and a guarantor ... but, perhaps that is just my mind (Bill Gulley could most probably provide clarification).  A co-signor would be a signatory to the lease where a guarantor would be under a separate agreement (at least here, since we have a government standard lease which does not provide for a guarantor).  We have all our guarantors sign a separate agreement which explicitly states they will assume responsibility for the obligations of their guarantee in the event s/he fails to fulfill them.

Angie W. · Answer

@Bill Gulley Thanks for the info!

Bill Gulley · Answer

A guarantor usually signs the original agreement, the parties to the agreement can simply refer to them; the undersigned as principals, endorsers and guarantors or similar wording might be used, in the signature lines they sign as guarantors they don't need to be under another agreement, that's a waste of ink and paper. :)

Angie W. · Answer

Thanks for the info @Roy N.

This site is so great for information on the multitude of things you can run across.

Although it doesn't look like my young tenants are going to pan out this time (not returning my phone call for missing app. info) at least now I have some useful knowledge for next time.

One question...For those using co-signers, how do you include that in your lease? A statement at the end? A clause? A separate agreement?  Not sure where I would put that in...

Roy N. · Answer

@Angie W.

We have three student properties in the local "universityville", so have had a fair amount of experience renting to young applicants who frequently have no prior rental experience or an established credit history.

We put them though our standard screening process and, as Bill alluded above, almost all require a guarantor (usually a parent or grandparent).  We process the guarantor through the same screening process.

We have had no greater problems with rent payment from our young tenants than the rest of our tenant population.  The odd time when there has been an issue, we have additional recourse to call Mom (or Dad, or Grandma) - whomever is the guarantor - which typically resolves the current, and any future, issue in short order.

Bill Gulley · Answer

Write down tenant requirements as a policy, if anyone fails to meet the policy you're home free. You can always allow some exceptions and justify your allowances which is better than leaning the other way.

For young tenants, I assess them by parents or others who sign as a guarantor, they may not have 5 years rental history but mom and dad do and they probably have a job too! :)

Account Closed · Answer

Theses days most people don't have 5 years rental history or 5 years at the same job and going by credit score is a joke.

Joe Gore

How do you assess young applicants?

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