All Rent up front?

Question

I had a showing yesterday and the perspective tenant offered to pay all 6 months up front he "really needed somewhere to live".

However he turned in his app with no past landlords for reference. Said he has lived in hotels and short term places the last 4 years. He is a traveling construction worker. Said his company got a contract in our area for the next 5 months and wants to stop paying $80 bucks a night for hotels....

Anyways...... Would you rent to Him? Seems kinda fishy...

Bill S. · Answer

Joshua D. - Good call listing to your wife and moving on. A simple way to deal with people like that is to request in writting additional information (like you did verbally) all the while continueing to show and take applications. If they ask, that application is "pending" while you wait for the information. If someone else comes along and rents it, so sad for him. @Aaron G. - Thank you for your service. Personally I would not have rented to you because of the short term issue. Not the cash up front. I assume everyone is going to pay rent (one way or another) so getting it sooner rather than later is ok but not really an incentive. The time it takes me to do the turn over in a few months is what would make me move on. Unless the short term person offered me significant additional funds that would compensate me for my time in 4 months or whatever, I would take a year long tenant every time. I would also wait to get a long term tenant too. It's really not personal, it's business. I don't owe someone looking for a short term lease anything so unless I feel compensated for the extra effort I know is required I'll take long term everytime.

Account Closed · Answer

Verify the employment. And verify to make sure the "short term places" weren't jails or prisons.

Jordan Thibodeau · Answer

@K. Marie Poe but what if he kept his cell clean and tidy? :) I agree with Marie.

Matt M. · Answer

Had a guy like this rent from a builder about to go under on his $1mln spec house. Guy came with $13k cash, which covered a few months. The builder never got another cent & had to go through eviction. The guy trashed the place & lived there for 6+ months. He was a drug dealer. Builder didn't care as the bank took it & he pocketed the case. Check his references, credit, & background.

Stephen S. · Answer

Does he have four years of receipts for all the hotels and short term places? They would have been an expense-able item for his taxes - so you can see also them if you ask him to verify employment history and income requirements with tax returns. I wouldn't want to take all the money upfront as doing so may well serve to create a de-facto agreement to let him stay no matter what. I think I would want all the money deposited into an account in his name at my bank with a monthly direct-payment into my account for the rent arrangement. ======== I had a showing yesterday and the perspective tenant offered to pay all 6 months up front he "really needed somewhere to live". However he turned in his app with no past landlords for reference. Said he has lived in hotels and short term places the last 4 years. He is a traveling construction worker. Said his company got a contract in our area for the next 5 months and wants to stop paying $80 bucks a night for hotels.... Anyways...... Would you rent to Him? Seems kinda fishy...

Mark Langdon · Answer

I did this only once but I checked out their employer and references but that's not a good reason to do it. I may have gotten lucky. It is a red flag so I don't recommend it. Anyone who wants to hurry up and move in with some cash is a problem. Wait for a better tenant.

Dennis Starkey · Answer

We used to be a lot more trusting then we are now, being a landlord will do that to you. Normally when this type of proposal is made by a prospective tenant, at a minimum they are wanting to hide something; either very bad credit, work history, or the fact that hotel they was staying at had 'Dept. of corrections' somewhere in it's title. They'll normally offer full term rents, or close to it, 9 to 12 months up front. and when I've asked them to still fill-out an application for their credit/work history, they want to know why, "If I'm paying all cash do I need to do this??", and have yet to have someone fill-out an application. Next time they call, they've had some "unexpected expenses" come up, and now they have 4 to 4 1/2 months rent available, and still don't see the need to fill-out a credit/work history application. I tell them the conversation I had once with my ex father in-law; he didn't believe in credit or credit cards, and couldn't understand why, when they went out of town, he couldn't just walk up to a rental car company, and plop down full cash, say $500.00 for a weeks rental, as they still wanted a credit card. I asked him, if he owned the rental car company would he let a total stranger walk up, put $500.00 on the table, and drive away with a $25000.00 car... if he did that would probably be the last time he ever saw either the car or the person who rented it. Even if you decided to go ahead with it, you'd most likely be in violation of state law, as at most you can collect, 1st, and last, or month & 1/2 and last. once they've occupied they could simply take you to court and get the excess refunded,and the judge may take the opportunity to make an example out of you, they will not care who's idea it was originally. Any examples I'm familiar with, whatever you get upfront on one of these deals, is that last money you'll ever get from that tenant, you'll have a lengthy & costly eviction, and end up with a trashed house, with several months of uncollected rent. Unfortunately there are some that use gimmicks to entice/fool others, and that includes prospective renters... once they've got the keys, they start saving up "in cash" for next years target to rinse & repeat.

Joshua D. · Answer

Well we just got the place rented, it took two weeks, our longest vacancy yet, but it was well worth waiting for the right person to get in there. Thank you all! P.S. Was it just me or did they mention this question in the last podcast? I think I might have been part of the Fire round!

Aaron G. · Answer

@ Bill S. I like your point of view. The more I learn and network with investors the more I find myself leaving the mindset of the renter and favoring the rules of the landlord. Having said that the hardest part I think I will have to overcome is putting each individuals story aside. It will probably happen much more easily the first time I bend the rules because of the story somebody gave and then being burnt/taken advantage of...

K. Bailey · Answer

I'd work with a guy who had an unusual story like his...provided he could back it up and provided both my wife and I felt good about him.