To Rent, Or Not To Rent - that is the question

[Jim Cran]

I have my first rental up for rent (WOOHOO!) and have 2 applicants (co-applicants that are boyfriend/girlfriend). I need advice on whether or not they are good prospects. I used MySmartMove.com through BiggerPockets to do a background and credit check - results below. The couple is fresh out of college and appears they've never had their own apartment(s) aside from college dorms, if that. 

WOULD YOU RENT TO THEM? Please explain why or why not as well as any additional conditions you'd impose (i.e. co-signer) if any.

Rent is $995 / 2 = $497.50 per applicant per month (PM)

I think it's worth mentioning that this unit is on the westside of Cleveland and rents in the area range from $800 - $1200. This unit is fully renovated with new kitchen, bathroom, appliances, central air, windows, carpet, paint, covered garage parking, provided washer/dryer. Asking price was $1100 but we lowered it to $995 after 3 weeks of several inquiries but no takers.

Applicant #1: $1,500 gross income PM

Credit Report:

Count	High Credit	Credit Limit	Balance	Past Due	Payment	Available
Revolving	7	$19,851	$21,200	$12,928	$0	$318	39%
Installment	2	$27,732	$0	$27,141	$0	$403	N/A
Mortgage	0	N/A	N/A	N/A	N/A	N/A	N/A
Open	0	N/A	N/A	N/A	N/A	N/A	N/A
Closed w Bal	-	N/A	N/A	N/A	N/A	N/A	N/A
Total	9	$47,583	$21,200	$40,069	$0	$721	N/A

ResidentScore	Score Factors
675	Bankcard account balances are too high in proportion to credit limitsToo many revolving accounts with balances too high in proportion to credit limitsToo many recently opened accounts in proportion to total number of accounts Available credit on bankcard accounts is too low

Applicant #2: $2,000 gross income PM

Credit Report:

Count	High Credit	Credit Limit	Balance	Past Due	Payment	Available
Revolving	2	$2,509	$3,300	$2,153	$0	$76	35%
Installment	1	$24,792	$0	$23,368	$0	$256	N/A
Mortgage	0	N/A	N/A	N/A	N/A	N/A	N/A
Open	0	N/A	N/A	N/A	N/A	N/A	N/A
Closed w Bal	-	N/A	N/A	N/A	N/A	N/A	N/A
Total	3	$27,301	$3,300	$25,521	$0	$332	N/A

ResidentScore	Score Factors
672	Bankcard account balances are too high in proportion to credit limitsLength of time bankcard accounts have been established is too shortToo many recently opened accounts in proportion to total number of accounts Too many revolving accounts with balances too high in proportion to credit limits

MySmartMove.com recommends renting to them but it doesn't seem like their incomes are enough to pay rent, utilities, etc. when factoring in all their debt.

Thanks in advance for your feedback!

-Jim

[Thomas S.]

Do not waste any more time screening these two. They are extremely high risk for too many reasons.

Chances are they will split up in less than a year and you will be left with non payment of rent and a vacancy.

If you cave out of desperation do not put them on anything other than a M2M lease. When the late payments start you will want to get rid of them quickly. Collect the maximum damage and LMR allowable in your state to protect yourself.

This couple is extremely high risk and having a co-signer will not prevent the train wreck you will likely face. Make sure each is individually responsible for the entire rent. Also when you screen in a case like this each applicant must have the required income to be able to carry the rent on their own. Combining incomes in a situation which amounts to little more than room mates will not work. Each must be able to afford the unit based on their own income. IN this case neither applicant can afford the rent.

When you end up in court you want to be able to collect from either tenant in the event one is not working.

PS: for future reference posting or showing a indivulaes personal financial information collected as a landlord is a violation of their legal rights. Walking a thin line.