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Updated almost 11 years ago on . Most recent reply

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51
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Mike L.
  • Commercial Real Estate Broker
  • Tustin, CA
26
Votes |
51
Posts

How to find good tenants for a property in a not-so-good neighborhood

Mike L.
  • Commercial Real Estate Broker
  • Tustin, CA
Posted

In Southern California, the rental properties that make most financial sense are often in some not-so-good neighborhoods.

I screen applicants by running a credit check, but I have never found anyone with a clean credit history. I've probably run a total of at least 40-50 credit applications (to rent out several units), and the highest FICO scores I've seen are in the mid 600s, and everyone has at least one collection on their record.

This certainly makes sense - if they made a lot of money and had good credit, they wouldn't be living in these neighborhoods.

I often end up overlooking mediocre credit, as long as the applicant has no past evictions. Some of these applicants turn out to be good tenants, but some turn out bad.

Can anyone offer practical advice for screening tenants for low-to-middle class housing?

Thanks,

Mike

Most Popular Reply

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246
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Siye Baker
  • Investor
  • Tallahassee, FL
89
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246
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Siye Baker
  • Investor
  • Tallahassee, FL
Replied

what kind of security deposit are you asking them to put down? I would charge the maximum allowable security deposit(cashiers check only) and if they can't come up with it, then your odds of receiving timely payment have dropped pretty reasonably.
do you talk to previous landlords going back beyond the most recent one?
do you talk to their employer?

I work at a company of which 80-90% are on government assistance. Of the 20 or so ppl, 3 or 4 live below their means and are improving their life one paycheck at a time. The rest have spent their money 4 days after they are paid(they are paid every 2 weeks). Low income does not always mean irresponsible, but you will have to do your work to find the few that are solid. Good luck!

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