Dilemma Choosing Tenants For My First Rental Property

[Wesley Kuo]

Greetings BP family,

I have a duplex in Whittier, California. Both units are identical: they are each 3b1b, 1,035 sqft, and single car garage with street parking.

Currently I have 3 groups of tenants who I'd like to rent to but cannot decide who are the best 2 out of 3:

1. 

A single family with 4 young kids. First impression is pretty good based on both appearance and attitude. They need to move because their current landlord is selling the property. I had a brief phone call with their landlord and he told me the family is a good tenant and they are never late on rent. Everything looks promising until I pulled the parents' credit reports. Their scores are just high 400s, and the reports indicate there are "serious delinquencies." They are aware of their scores, and they told me that they are in the process of repairing them. My agent who pulled reports told me that the husband was a victim of ID theft before. I am not sure if I should trust my gut feeling in the first place or let the credit reports overshadow the other merits from them.

2.

A single mom with 4  young kids and a section 8 voucher; they need to move also because their current landlord is selling the property. I have 0 experience on section 8 tenants but based on my research the pros & cons are 50/50. The mom's credit score is almost 700, and she talks very sincerely and looks eager to move in.

3.

A group of 4 college senior female students and a co-signer who is the father of one tenant. The numbers are pretty strong from co-signer's credit report. My only concern is that they are probably not as long-term as a single family since each tenant is not related and they are college students in 20s. The possibilities are endless for them once they graduate.

What will be your pick? Which group will you leave behind and move forward with the other 2?

Or should I host another viewing to find more qualified tenants?

Thank you very much for helping!

[JD Martin]

First question: do you have criteria? If not, then what are you using to gauge the suitability of each tenant?

Based on my own criteria, Tenants 1 & 2 are out. I don't take anyone with serious credit deficiencies, don't believe current landlords who often just want them gone. I don't take Section 8 so tenant 2 is out unless she has enough income to pay on her own. 

You should have some defined criteria as to what constitutes suitability as a tenant, lest you someday face a discrimination claim. Mine: 3x monthly rent income at minimum, no evictions, no serious credit report issues (generally that means no bankruptcies < 5 years, no recent charge-offs, no or almost no late payments, etc), no current or serious felonies, no Section 8. That covers the basics on background information for me. I don't do landlord queries because landlords that want problem tenants gone are more than willing to go Tony the Tiger on you when talking about the tenants.