can I take 4 months of rent as advance(in Arizona State)

Question

As I am screening applicants, one of the applicants has low credit score (500+), no bankruptcies, no evictions but has late payments.

a) Tenant is willing to put down 1.5 month security deposit (state allowed maximum) and 4 months of rent in advance. Is it legal to take 4 months of rent in advance? If so, what are the ramifications

b)How to deal with tenants who has low credit score (but all other qualities look good)

Mindy Jensen · Answer

@Kris Ashili , it may seem very tempting to take extra money upfront, but in most cases, this is the ONLY money you'll ever see.

500 credit score tells you a very important piece of information. This tenant does not pay their bills on time.

You want checks in the mail, not excuses on the phone.

It also sounds like you don't have a written criteria for accepting tenants. This is a super important piece of landlording advice. Decide the minimum criteria for living in your home, then do not deviate from this ever. Do not make exceptions for anyone.

No evictions, 580+ credit score (650 is even better), no accounts currently in collections.

Michael Hacker · Answer

To answer your question on legality, the tenant can pay more than 1.5 voluntarily:

Article 2 – Landlord Obligations 33-1321. Security deposits A. A landlord shall not demand or receive security, however denominated, including, but not limited to, prepaid rent in an amount or value in excess of one and one-half month's rent. This subsection does not prohibit a tenant from voluntarily paying more than one and one-half month's rent in advance.

Garrick Oconnell · Answer

This is a generalization but think if they are willing to not pay their creditors on time and they have that much money available you are next.

Garrick Oconnell · Answer

I have this offered often on my rentals in Phoenix and Tempe area.

Renters that do not meet my basic criteria offering months of rent ahead of time. I do not accept prepaid rent because it is a sign that this renter may have issues, almost always has more problems when you run the background check.

Just recently I had a applicant offer 6 months of prepaid rent, when I went through my standard motions and questions they had lies on there application and with that information was a high likely that there would be no more rent coming in. This is usually a sign of a pro tenant who will take your property hostage later.

I have been advised by landlords with 30+ years experience this often leads to more problems.

Nathan Gesner · Answer

I'm with @Mindy Jensen on this one. Many tenants will offer to pay large sums up front as a diversion. If they were irresponsible in the recent past, they will likely be irresponsible with you now.

Tenants with bad financial skills tend to have other problem areas, like cleanliness, relationships, employment, etc.

Another point: what is gained? You would take on a high-risk tenant and gain nothing for the risk. Why not take a well-qualified tenant that pays the same amount and presents little risk?

Carmen Severson · Answer

I paid up six months of rent when I received my student loans...to be sure my rent was paid

while going to college...!  There can be so many variations and reasons...

I am a newbie so other posts are experienced and more accurate with their warnings...

set your limits and stick to it for your own personal sanity...and safety...!

It is, after all, your investment to protect...!

Some people are just trying to rebuild and want you to feel secure

Others (like previously stated)...may be the only money you will see... professional renters know they have rights pay 4 takes 2-3 to get out...drag it out and they are there nearly 6-8 months on 4 months of rent...

the only way you can kick them out legally no notice is weekly rent in AZ

Ryan Swan · Answer

@Ashley Chris , listen to @Mindy Jensen's advice because it's spot on. Have a set of tenant application criteria and then never deviate from them.

Let's say the rent for your house is $1500/month, and the tenant wants to pay 4 months in advance PLUS the $2250 security deposit (1.5x), for a total of $8,250 out of pocket. Analyze that situation objectively: the tenant has that much free cash to pay you, but is making late payments on other debt obligations? Something doesn't add up...

I never let any tenants pay multiple months rent up front until they are well established and demonstrated a pattern of paying each month on time.

Sai T. · Answer

@Mindy Jensen

I respect your point but I will disagree with you and "At least if it's sitting empty, no one is doing any damage." really!!!

Carmen Severson · Answer

read the other investor in phoenix, tenant trashed rental on move out...

low credit score but was paying....dog poop everywhere, slider window smashed, all doors left open, curtains missing,

be careful if they are smooth talker or maybe exchange the info from other investor...?

I had a renter, hardship I didn't charge him deposit, but one months rent....

day 2 he became enraged and moved out, broke the breakers, left everything unlocked, broke fixtures inside

and demanded his rent back...and was very threatening...

this guy thought since he paid no deposit he would get his rent back for not being there...

some people do not think normally...

be careful

Mindy Jensen · Answer

@Sai Toll , I will stand by the original statement. Make a criteria of minimum acceptable standards, and then never make any exceptions for someone who falls below your minimum.

I hear time and again that people who are going through an eviction are doing so because they fell for a sob story or made an exception. If you always follow the same criteria, you can defend yourself against any frivolous lawsuit or be confident if someone threatens one.

It is far better for the unit to be empty for an extra month while you wait for the right, properly qualified person, than to have to go through a costly eviction. At least if it's sitting empty, no one is doing any damage.

can I take 4 months of rent as advance(in Arizona State)

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