1 high credit, qualified tenant; 1 bad credit, unqualified tenant

General Landlording & Rental Properties
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1 high credit, qualified tenant; 1 bad credit, unqualified tenant

Brent Tarnow
Investor · Oakland, CA · Member since 2015 · 63 posts · 55 votes

New landlord in Oakland, CA looking for some advice. 

We are trying to rent a unit and we have interest from a couple in which the woman has a 790 credit score, makes good money and by all accounts would be an ideal tenant.  The man has a much lower credit score with a couple of very old (but small) collections on his report.  He will also not have a job in the short-term.  

Here's my question:  Is it better to just have the tenant with good credit and finances sign the lease, or is it still better to have both of them on it?  Does it make any difference if, say, she were to leave and he decided not to vacate?  

I'm inclined to have her just sign the lease, but if he holds over does it make it harder for us, as the landlords, to assert our rights against a squatter with no lease whatsoever?  

Thanks

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Marcia Maynard
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
9y

Require all tenants age 18 or older to sign the lease/rental agreement as jointly and severally liable.

If, as a household, they meet your minimum criteria to rent, do so. It's not uncommon for one tenant to have a better record than the other. Don't let this deter you.

No need to worry about the negative items on the credit report that are very old and minor. The items may or may not be accurately reported. Ask the prospective tenant about them. They may be unaware of them. If they're willing to pay the debt off or enter a payment plan with the creditors, great! If you feel you're taking on significantly more risk, ask for a bigger security deposit.

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  • Marcia Maynard
    Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    9y

    Require all tenants age 18 or older to sign the lease/rental agreement as jointly and severally liable.

    If, as a household, they meet your minimum criteria to rent, do so. It's not uncommon for one tenant to have a better record than the other. Don't let this deter you.

    No need to worry about the negative items on the credit report that are very old and minor. The items may or may not be accurately reported. Ask the prospective tenant about them. They may be unaware of them. If they're willing to pay the debt off or enter a payment plan with the creditors, great! If you feel you're taking on significantly more risk, ask for a bigger security deposit.

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  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    9y

    Make sure they are both on the lease. This way the person with the 790 credit knows that they are basically on the hook for the less qualified applicant should things go south. 

    You have someone with 790 credit that makes enough money to qualify on their own from the sounds of it. Don't overthink it, accept them with the normal security deposit you require. Not sure how it is in CA but here in CT, tenants with 790 credit that make good money do not grow on trees. 

    Now if the 2nd applicant had a criminal history and recent big time credit issues, taking them on may be a question, but from the info provided I would proceed with them. 

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  • Nicole Graves
    Real Estate Investor · Richmond, VA · Member since 2016 · 133 posts · 31 votes
    9y
    Brent Tarnow Wish you well in your decision. Seems like you received some great thoughts above. Whatever you decide make sure its something you're comfortable with.
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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    It would be best in this situation to reject their application. In any marrage what one partner does has a direct impact on the other. Couples often will use one spouse as the "bad guy" when it comes to defaulting on debts. You could also end up with just the husband as your tenant in the future.

    When screening applicants each must be considered as individuals but when one fails they both fail. Reject these applicants if the husband does not meet your screening criteria. You are operating a business not a charity. Let mom and pop landlord take the risks.

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  • Ryan Scott Isacksen
    Property Manager · Castro Valley, CA · Member since 2016 · 212 posts · 110 votes
    9y

    Not having the job plus the credit score is an issue.
    The rent board would view both as being original tenants, lease or not, so both would need to be on the lease.  

    Keep in mind that if the relationship fell apart, the 'good tenant' would likely move and you would be left with the other half.

    You may need to lower your asking rent a little bit if you are not getting interest from qualified tenants.

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  • Brent Tarnow
    OP
    Investor · Oakland, CA · Member since 2015 · 63 posts · 55 votes
    9y

    Thanks everyone, I appreciate all the advice. We ended up taking a leap and signing them up.  While we want to protect ourselves (thus, this post), we ultimately trust them and want to help them make it work. 

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  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    9y

    @Brent Tarnow, I wish you well with this tenant.

    @Michael Noto gave you some great advice. Put them both on the lease and make them aware that they are both on the hook for the entire amount of the rent for the entire duration of the lease.

    They may very well be awesome people, but I've known too many women who get sucked into relationships with "bad boys." If this is the case, and she leaves him, you want her to know that her hard-earned high credit score is in jeopardy if she does not ensure the rent is paid in full.

    [email protected]Podcast Guest on Show #261
    BiggerPockets
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  • Chuy Gonzalez
    Investor · Long Beach, CA · Member since 2012 · 313 posts · 190 votes
    9y

    It's funny you should mention this...Last year I had several parent/ child adult occupants fill out an application where the child (mid 20's or so) had an impecable fico and the parents FICO was wrecked. If it was something like a medical mishap perhaps I could work with it...but I saw collections from jewlery companies, cable TV and other stuff like that.

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