High Cash, Low Income Tenant

High Cash, Low Income Tenant

Kitchener, ONTARIO · Member since 2015 · 20 posts · 0 votes

Hey all,

I have my property up for rent right now and I'm asking 1400 all inclusive (have a basement unit so cannot separate utilities).

Typically the rule of thumb is 3x the rent, or about 50k annual salary.

The person that came in today works part time, and works on her online business full time. She recently went through a divorce and ended up selling her old place and split the proceeds (mortgage free). She's now sitting with 200k cash. However, her salary is only 20k a year.

I've looked up her business and she has some raving reviews. She's creating sugar art for weddings and so each one of those take days to complete. That tells me she's responsible enough to see things through.

She provided me her credit report and it was completely clean. She also naturally started talking about her distaste in debt and how she would buy on credit to collect the points and pay it off the moment she gets home.

Anyway, she's willing to pay the year up front, I get a good vibe from her attitude, and she does have a small but positive brand online.

So, fellow BPers, what are your thoughts?

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  • Member since 2016 · 143 posts · 157 votes
    9y

    I have dealt with low income folks with good credit and some savings. It has worked out very well for me. Good luck!

  • San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    9y

    Honestly, recently divorced people are not stable tenants.  They don't normally stay put, and their lives are usually dramatic for the first year or two.  I learned to avoid them like the plague, and deny them if I could.

    You can easily deny her based on lack of income.

    Don't accept a printed credit report.  Always run your own credit check on them.

    Online reviews mean nothing.  You'd need to see her tax returns and business banks statements.

    Also, think about if getting the year's rent up-front will impact your taxes.

    The thing is, you have no way of really knowing what kind of tenant she is.  You have no landlord reference.  If she moves in, will there be major drama with the ex coming over?  What kind of men will she be dating?  What kind of lifestyle?  Will she disturb your other tenant?  Go through a crazy biker tattooed boyfriend stage, with motorcycles parked on the lawns and a grow room in the closet?

    You just don't know.

    I had a very good friend who was a professional woman who worked for Intel, with great credit.  But, her dating life was utter drama and madness.

    What I tell people is that when it takes work to find reasons to rent to a tenant, then you should turn that tenant down.  Because you already have easy reasons to turn them down.

    Find a tenant who simply meets your criteria without you having to do any extra work.  

    And have criteria.  And stick to it.  It's not your job to help someone with potential.  Let some other landlord learn the hard way with that applicant.  

    Not to say you couldn't get lucky with this one.  But, the odds are against it.  Too many unknowns.

  • Kitchener, ONTARIO · Member since 2015 · 20 posts · 0 votes
    9y

    Just an update for everyone: I ended up going with the tenant. It's been about 2 weeks since she's moved in and I haven't heard from either her or the tenant in the basement. I'll take that as things have been pretty smooth so far. Hoping to say the exact same thing in a few month's time!

  • Lockport , NY · Member since 2014 · 265 posts · 124 votes
    9y
    Originally posted by @Chungsoon Haw:

    Just an update for everyone: I ended up going with the tenant. It's been about 2 weeks since she's moved in and I haven't heard from either her or the tenant in the basement. I'll take that as things have been pretty smooth so far. Hoping to say the exact same thing in a few month's time!

    you should give them both a call, especially the new tenant, just to say hi and to make sure everything is going well.  show that you care!

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