Auburn, MA · Member since 2015 · 16 posts · 2 votes
I bought my first investment property last month. There is an existing tenant on 1st floor and she is great. She has friends who are looking for a place, as they gave their notice at their current apartment. I met the couple and they have a 7 year old son, and they seemed very nice. I did a background check and the mom has awful credit. Last night, I denied them the apartment because of this and they were devastated, because they really liked the place. Then an older gentleman who knew them well called me today and said he would co-sign. What do you think I should do? Thanks.
Auburn, MA · Member since 2015 · 16 posts · 2 votes
10y
Thanks for the advise J Beard and Benjamin Timmins. It wasn't easy for me but I had to say no. Like you said Ben, I have to keep the emotion out of it. J Beard, you are right, I'm sure I am going to hear a lot more like this in the future. Thanks again guys.
Roanoke, VA · Member since 2014 · 404 posts · 203 votes
10y
The whole point of a consigner is to guaranty the lease for someone whose credit is bad. Just get an application from him and if his credit is good you can move forward with the lease. We require a cosigner to have verified monthly income at least 5 times the rent amount.
When the tenant fails to pay, the cosigner steps in to pay.
Rental Property Investor · Mc Kinney, TX · Member since 2015 · 35 posts · 9 votes
10y
While managing a small retail finance branch for several years, I reviewed thousands of loan applications. There is a reason the bible says not to co-sign for anyone! The maker knows someone else can be on the hook and the co-signer isn't expecting to pay.
If they don't qualify, turn them down. And by the way, never co-sign for anyone else.
I have made all too many collection calls to the co-signers, only to have them tell me "I'll call Billy and he'll pay." But Billy never does pay.
The call is totally up to you, but I too would advise against using Co-Signer's. I don't let anyone into my rentals who can't qualify on their own merit. Some very good points made above. I would also add that I try to avoid renting to current tenants friends or relatives like the Plague. Particularly so if they are going to be in the same building. If you end up having an issue with one of the set's of tenants, there is a very high probability you may end up having issues with the others as well, as they will tend to stick together and give moral support to one another, regardless if they may be in the wrong.
Additionally, if you ever end up having to evict one set, the other set of friends or relatives may well leave on their own, now leaving you with 2 vacancies to fill instead of one.
This is just my policy and how I view it, I'm sure others may have a different view.