How to handle Renter's Co-Signer

Question

Hi guys,

I have an application in for my property.  Here's the story.
	   Single mom with 1.5 year old girl, about 6 months ago separated from her baby daddy and moved in with one of her friends.

She just started a job selling timeshares 2 months ago, but didn't brother to give me any paystubs because she knew that wasn't enough to get her into my property.  Since the job is almost purely commission, she estimated that she will earn $5k a month.  She has $3600 in her savings which was recently deposited.

Here's the kicker, she purchase a new car ($539) with her friend as a co-signer and he even agreed to co-sign for the lease. They both signed my application form and he also sells timeshares. Apparently, he must be the top sales guy as he made over $200K in 2013. I meet the guy, and on the spot, I asked him to login into his account and show me his paystub. I verified and he did net $170K this year. He has a nice country club house with his wife that they purchased 2 years ago for $800K. His wife does not know that he co-signed for the car for my tenant or possibly my house. I know what you guys are thinking, but he says "She's a very good friend".

How would you guys handle this?

PS. So far, I've showed the house to 16 parties and got 4 applications, I rejected the last 3 they did not meet my requirements.

Account Closed · Answer

I had a similar situation last year in which a young couple claimed to be brother and sister. The brother agreed to be on the lease but the sister would not. I require all adult occupants to be on the lease and because of this I denied their application. The whole thing seemed fishy and I'm glad I sent them up the road.

I don't lease to people if things seem shady. I'd rather endure a loss on the front end taking extra time finding a good tenant than dealing with a loss and headaches on the backend getting rid of a bad tenant.

If you decide to go forward, consider doing a six month or month to month lease so you can get rid of them if things get weird. Also, at the six month renewal you can run her application again. Perhaps her income will be stable and you can move her into a longer lease without him.

Bill S. · Answer

No question in my mind. Applicant #2 that you got today, if I had to select one of the two. Not sure of who your target tenant would be, but if it were me I would still keep looking. You have not stated how much rent is. Would the guy's dad pay the full rent amount or would they expect the girl to pay half. If the dad is paying it all, get him signed up for automatic debiting and payment should not be an issue.

Bruce L. · Answer

Here's an update.

I spoke with the girl and told her that I couldn't verify any of her past landlords, one of which wasn't her fault as one property mgt. purchased another and didn't move the tenant history to their system.  She didn't give me any pay stubs, and so I told her no.  Then the slick talking timeshare guy called me and almost convinced me to do a good deed and help her out and that I had nothing to worry about because he would be on the hook.

At first, I was thinking of using word "Wife" to him if I ever had to do that, but the girl told me that the wife was medically ill (brain tumor or something like that) and then she told me that they are really close, closer than I may think but not having an affair with him and she also began to tell me that she's pregnant. I really don't want any drama and she doesn't seem like she would be a long term tenant so I decided to past on her.  I understand if I want someone long term that I would have to have them sign a longer lease, however most people that I come across doesn't want that type of commitment (I'm the same way)

So, I approved the younger adults with the military dad to co-sign.  I spoke and verify with the son's current landlord and he said that he was one of his best tenants and he would of done anything to keep him.  They choose my place because it was close to his school and her work.

I hope I made the right decision.

Matthew Paul · Answer

Well Bruce , I would rent to her , with the guy as a co signer , if you have a problem collecting  Just say the word " WIFE "

Bill S. · Answer

@Bruce L. the only way I would take him is if the Dad signed the lease (fax copy would be ok with me) and signed up for my debiting service (ClearNow-which TAKES the money out of their account and put it in mine). If you want them to stay longer you need to have them sign a longer lease. Even someone that says they want to stay years and years can have a circumstance change and the need to move tomorrow. Now I do like to avoid those that only need it for a 6 months so anything less than a years pays extra. I take the first qualified unless I have multiple applicants.

Bruce L. · Answer

Don't know if this matters or not, but the dad lives in North Carolina.  If I had to take him to small claims, I'm assuming I don't have to file the paper work where he lives.

Bruce L. · Answer

My Rent is $1100 a month with $1100 security deposit.  The way his dad is been giving him money was he would just transfer money every month into the son's account where the son would then pay his bills.

I'm basically looking for a long term tenant who has a stable job (2 years preferred) , nets 3.5 times the rent and no past evictions or problems.  I'm easy when it comes to credit.  A lot of people in Vegas has bad credit due to foreclosures.

Bruce L. · Answer

Thanks guys, yes I agree @Bill S. a vacancy is a blessing compared to a bad tenant.

So, I got another application today. Young couple engaged that has only been living together for 6 months now. She is 20 years old, nets $1600 a month and has a $375 car payment, He is a college student living off his dad's income as the dad agreed to pay for his living expense as long as he was in school.

The dad would be the co-signer and he nets $8000 a month. Dad is a retire air force pilot, who is now a civilian working for a Air Force Dad has no expense other than his $500 apartment and $368 car payment.  He owns a house free a clear, but moved for his job where he rents.

Some good things i guess is that both the college (Son) and her work is nearby my property, so I would hope that they would stay longer than a year.

Which of the two applications would you choose? To me a father is less likely to cut off his son than a guy who is "Good friends" with this girl.

Bill S. · Answer

Do you really want this drama in your life? Sure you can collect from this guy but what will you have to do to collect? Unless you have a very good lease then the headache of dealing with situation will far out weigh the meager income from the situation.

Remember - A vacancy is a blessing compared to a bad tenant.

Also if you do lease to them. Both on the lease and sign it with them "jointly and severally liable."

Jon K. · Answer

I would put her on the lease and let him co-sign. Or put them both on the lease. Either way, both of them would be responsible for rent and you could take one or both of them to court to get the money if they don't pay rent. He's co-signing the lease. If she doesn't pay rent, you could go after him for 100% of the debt as he is co-signing. Same if he and she are both on the lease-- both of them are 100% responsible for rent if the other person doesn't pay, and you can go after one or both of them for that rent money.

Why the double security deposit? The co-signer more than meets any rental income requirements that I've ever heard of with that high income and (I'm assuming) good credit as he is a homeowner. It's not like he would be hard to find if he doesn't pay rent-- you know where he lives. If she doesn't pay rent, small claims.

I would NOT remove him from the lease in one year. She either qualifies or she doesn't based on your written criteria. Her living there a year doesn't change the fact that she alone doesn't qualify for your written rental criteria. If he dumps this affair, this lady may or may not be able to afford it selling timeshares. Her job is new. And, you don't know her recent income as she's refusing to show you paystubs. Co-signer $170,000 or not, require recent pay stubs and rental history check from this woman AND the male co-signer.

Obviously I'm assuming this is an affair. But, I'm not sure that's even relevant. He's willing to co-sign. So, she has to pay rent-- if she doesn't pay rent, you can go after her or after him for that rent money. It's not your job to inform his spouse or make sure he informs his spouse.

How far away from your income requirements is she alone?

Check her rental history, income, etc. etc. too while checking his.  Make sure she has the income she says she does, make sure she doesn't have a criminal history or evictions, etc. Check her TOO even if he co-signs.... make sure she's not hiding something. Him co-signing or not, CHECK HER rental history and income too. Verify everything about her. Make sure she's not using him to hide a sketchy past of her own.

What on earth are your rental criteria if a homeowner (co-signer) making $170,000 a year requires a double security deposit??? I doubt I would even qualify for your rental.

How to handle Renter's Co-Signer

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