Your opinion: would you rent to this tenant

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Your opinion: would you rent to this tenant

Aleksey F.
Rental Property Investor · Forest Hills, NY · Member since 2015 · 26 posts · 10 votes

Hi all !

While I have already denied the tenant, once in a while I run into a situation like this and wonder would someone else have done something different...

This was an REO duplex and I inherited tenants on one side and renovated the other unoccupied side. The existing tenants would not pass my criteria of 3x the monthly rent , 600 credit score, no evictions / credit history since they do not have any credit history / credit cards etc. But they are working out good. They are a retired couple and pay cash on time and lived there for 10 years.

Their adult daughter reached out looking to rent the renovated side. Her income is right under 3x the monthly rent requirement but does have a steady job in a dental office. Her credit score is 500 and is way under the requirement & has a long history of credit card bills being 30-60-90 days late. Additionally during the walk through she mentioned car engine trouble and obviously it was expensive and stressing her out.

So this was fairly easy denial - I do not want potentially late rent and to put someone in position where they are in over their head. I did not offer any compensating factors like a cosigner or double the security deposit. But she really wanted to live there next to parents who vouch for her and they also say she has voluntary child support from the father of her kids. And if she did meet the requirements it would be ideal tenants who would live there for a long time imo.

So thanks for reading and let me know what you would do ?

-Alex

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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y

"So this was fairly easy denial"

I agree 100%, I would reject without a second of hesitation. She is financially irresponsible, living beyond her means, rent would never be paid on time and having her as a tenant would place a serious emotional strain on your existing tenants.

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    7y

    "So this was fairly easy denial"

    I agree 100%, I would reject without a second of hesitation. She is financially irresponsible, living beyond her means, rent would never be paid on time and having her as a tenant would place a serious emotional strain on your existing tenants.

    3Reply
  • Michele FischerPro Member
    Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
    7y

    If she didn't meet my criteria I would deny her, so that is the right move.

    If you are looking at your criteria for the future, here's how I approach this:

    - If there is child support, is it documentable (with bank statements, etc) to count toward income?

    - Steady job that she has held for over a year is worth consideration, we look at that

    - For credit I look at more than the score.  I see unexplainable debts (possible amounts owed to prior landlords) and late utilities as bad, but the rest is just the poor personal fiannce habits or life circumstances that make applicants renters rather than owners.

    - Having roots in the community, normally having lived in that neighborhood for several years, or in this case being close to her parents adds screening points.

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  • Charles D Cruz
    Pueblo West, CO · Member since 2017 · 69 posts · 53 votes
    7y

    If your gana make rules, you should follow them.

    If you want to give consideration then check her payment history on utilities.

    1Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Aleksey F. What type of area is this in? A low credit score is meaningless in a C class area. No evictions, makes 3 times the rent. I’d have probably given it some thought if it’s in that area. If her folks are near by she’d be likely to stay a while.

    I rented late last year to a young man with no credit history (No SSN). So far he’s been great.

    3Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    Like my boy Caleb said ,The credit thing I’d overlook if it wasn’t a great area .. the income being low and history of not paying bills I would be hesitant and would need to really dig deep into what happened . As much as you would like this to work out for the parents sake you need to consider how ugly this situation would get if you had to throw her out . It would be much worse than denying her now I assure you !

    3Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    7y

    If you do this, and I think you're trying yo talk yourself into it, write the lease for both sides and put the parents on the hook for the rent. You've turned the duplex into an SFR, let them figure out the living arrangements. Let her make the inevitable excuses to her parents, not you. If the parents turn down that deal, you really do have the perfect excuse to turn her down with no hard feelings from them. If she doesn't want to do it, well, too bad, she doesn't meet your criteria.

    3Reply
  • Aleksey F.
    OP
    Rental Property Investor · Forest Hills, NY · Member since 2015 · 26 posts · 10 votes
    7y

    Thank you  !

    @Jim K. 

    @Dennis M.

    @Caleb Heimsoth

    @Charles D Cruz

    @Michele Fischer

    @Thomas S.

    0Reply
  • Anthony Wick
    Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    7y

    99% of the time on BP when the question is; would you rent to this person, the answer is no. This situation is no different. I like that you denied her already but were just curious what others thought. Most posts are people needing others to give permission for a denial. A great  income doesn't matter if a person doesn't pay their bills. If her child support gets her over the 3x income, does it matter? Nope. She doesn't pay her bills. Who is going to co-sign for her? Her parents that don't make 3x their rent? Pretty simple denial. Now, the real question is; will this affect your "relationship" with her parents? If they give you any grief, then you'll probably have to terminate their lease as well. 

    0Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    7y

    I would not have rented to this tenant. The not paying bills gets me, is it too much trouble to make at least a minimum payment. 

    Keep in mind also the parents are not always as welcoming as you would think. I have a single family next to a MF. In the SF  parents and  an adult child/spouse/ grandchild had moved in together to split expenses. A year later the adult child/spouse wanted to move to a place of their own.   I did not know this, I casually mentioned an available apartment to the mom.  Her response to me was I am sure glad you didn't tell my daughter.

    0Reply
  • Sami Gren
    Rental Property Investor · NJ · Member since 2019 · 442 posts · 40 votes
    7y

    I agree to what the other posts here had to say....

    just one point, I find that I  don't put such a focus on 3 times the rent, simply because it's  not a one size fits all, a single person has much much less expenses than a married couple with 3 kids.........

    I look at each situation individually 

    0Reply
  • Aleksey F.
    OP
    Rental Property Investor · Forest Hills, NY · Member since 2015 · 26 posts · 10 votes
    7y

    @Anthony Wick It will be something that will always be there from now on... I don't think it will affect my relationship with the parents that much but ultimately if it does go sour then I will deal with it. Reading yours and others advise does solidify it for me that I made the right decision and in the future I should not get myself in the situation where I feel bad & need to make it more clear from the beginning that not meeting requirements is rarely allowed.

    @Colleen F. good point !

    @Sami Gren in this case I need ideally _at least_ 3x the monthly rent of income. The rent is $750. Her income is $1900. 3X the rent would be $2250. But tenant has to pay all utilities - water/sewer, gas for heat, electric. So in a cold winter month the total amount to be paid could be as much as $1200.

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  • Anthony Wick
    Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    7y

    @Sami Gren

    I put a great emphasis on 3x monthly rent. Studies have shown those making at least 3x the rent are less likely to default in rent. It’s a huge reason banks use debt to income ratio. The other criteria may have an explanation (divorce, business folded, health care expense, etc) but there’s no explaining that you don’t make enough money to pay the rent.

    0Reply
  • Marci Stein
    Rental Property Investor · New York, NY · Member since 2011 · 956 posts · 510 votes
    7y

    It’s a potentially messy situation because when she doesn’t pay , you may have to evict . 

    That would injure your relationship with her patents , who have been good renters . You don’t want that . 

    0Reply
  • Matt Pastier
    Real Estate Agent · Central Florida · Member since 2013 · 118 posts · 102 votes
    7y

    @Aleksey F. I wouldn’t second guess this one. You made the right call. Having criteria you stick to will save you headaches in the future and help ensure you leave emotion out of it. There might be exceptions you’re willing to make, but I would be sure it’s because of other criteria far outweighing the bad and being able to document that criteria. A vacant property is always better (and cheaper) than a bad tenant that doesn’t pay rent.

    0Reply
  • Sami Gren
    Rental Property Investor · NJ · Member since 2019 · 442 posts · 40 votes
    7y
    Originally posted by @Aleksey F.:

    @Anthony Wick It will be something that will always be there from now on... I don't think it will affect my relationship with the parents that much but ultimately if it does go sour then I will deal with it. Reading yours and others advise does solidify it for me that I made the right decision and in the future I should not get myself in the situation where I feel bad & need to make it more clear from the beginning that not meeting requirements is rarely allowed.

    @Colleen F. good point !

    @Sami Gren in this case I need ideally _at least_ 3x the monthly rent of income. The rent is $750. Her income is $1900. 3X the rent would be $2250. But tenant has to pay all utilities - water/sewer, gas for heat, electric. So in a cold winter month the total amount to be paid could be as much as $1200.

    Yes I totally understand that you have a specific reason for 3× the rent. But since you mentioned it I just felt like bringing out the point in General, that when people follow a rule they need to think in to it, because sometimes it can be slightly different  by the amount of kids in family, or in your situation where they pay more bills etc.

    0Reply
  • Sami Gren
    Rental Property Investor · NJ · Member since 2019 · 442 posts · 40 votes
    7y
    Originally posted by @Anthony Wick:

    @Sami Gren

    I put a great emphasis on 3x monthly rent. Studies have shown those making at least 3x the rent are less likely to default in rent. It’s a huge reason banks use debt to income ratio. The other criteria may have an explanation (divorce, business folded, health care expense, etc) but there’s no explaining that you don’t make enough money to pay the rent.

    If you follow the study, then I fully agree. You definitely have a point.

    I'm just a person that I like to go on my own a little, and I deal with each situation different, and thank god I've had great success till now.

    and about the banks, well one thing about banks is, that they don't care as much as a landlord if you don't pay, (the biggest proof, look back to prior 2008), the reasonings are simple, first of all the underwriter does not feel the loss like a landlord does....... and also, the bank  has the house to forclose on and a landlord does not..... so as long as they follow the rules they are technically fine...

    the banks can only. See so far as to your credit cards etc. That appear on your reports, they don't see your vacations, nor do they see your supermarket shopping, and your brand name watches etc. Etc.

    I TOTALLY AGREE  that there is definitely something to the 3× times study, all I'm saying is when you wanna do your own research etc. You can find loopholes to be more lenient..  I'M obviously talking in areas that the income in general is lower, in a class A or B area I agree If the clientele is big enough I'd rather go with 3× than 2.5×

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