New Applicant makes 2.5x rental income - Q's?

Question

Hello again,

Curious if this tenant seems reasonable to you:

Rental on property is 1245/mo with tenant paying electric and gas.

Tenant makes 18/hr with a 11 month old baby, who's mother will watch when she is at work.

Husband currently lives in Florida (where they used to reside) and works a maintenance job and is trying to transition back to Pennsylvania.

Have not ran the background or credit checks yet.

Have had 7 walk throughs and this lady is the first to submit a formal application.

Trying to get the unit rented by 05/01 so I have zero vacancy, which is 11 days away.

This is my first rental, so any additional input would be neat.

Thanks!

Tim McKelvey · Answer

@Lawrence Paul, please be careful.  What are your criteria?  Most landlords will not rent to an applicant with less than 3:1 earnings to rent ratio. $1245/mo rent is a lot for an $18hr/hr job.

If your criterion is 3:1, then don't rent it to that person, they do not qualify.  Would you rather miss out on a week or so worth of rent, or have to deal with collecting from/evicting someone who could not pay?

Just my perspective.

Lawrence Paul · Answer

Sounds like I need to sit down with myself and make a complete list/rules of all my pre screening requirements and preform a phone interview prior to the walk throughs.

Do you preform a phone pre-screening prior to a walk through? Am I understanding this correctly?

Brit F. · Answer

@Lawrence Paul, congrats on your first rental!

If you determine that your earnings to rent threshold is 3:1 and if you accepted this applicant, you would need a legally justifiable reason why you waived that requirement for this applicant.  Hypothetically, if you felt sorry for her b/c of the 11mo old baby and wanted to give her a break b/c of that situation, that could be interpreted as discrimination based on familial status - even though it may *feel* like you're trying to do the right thing.

Step 1: determine your criteria

Step 2: screen applicants

Could the Mom be a co-signer on the lease?  Maybe she has a pension, social security, or other income that would bump them to 3:1.

Thomas S. · Answer

Not only do they not qualify based on income, which would be a automatic rejection for me, they are also unstable. I require applicants to have a minimum 2 year employment relation with one employer. I do not rent to anyone moving/starting a new job in my area. In addition I would never bother screening a applicant that needs to move the same month they are applying. Very unstable, too many red flags to bother screening based on my standards.

My concern is you are too highly motivated/desperate based on filling the unit immediately to be making rational decisions.

This applicant is a automatic pass based on my screening standards. What are your standards, do you have standards.

Nathan Gesner · Answer

Sucks you are vacant but taking on a problem can cost you a lot more than a vacancy. She can't afford it. The rest of your information doesn't matter.

You would be better off dropping the rent 10% and finding a highly qualified renter.

Jonathan W. · Answer

@Lawrence Paul if you run that credit check...i have a good feeling the results won’t be favorable.

(I mean she is already trying to live beyond her means)

Don’t be impatient. There are plenty of people who will try to live in a place they don’t even like because the landlord will say yes to their application.(and trust me they will pretend to LOVE the place and throw stories or feelings at you)

Don’t be that guy and if seven walk through and you only get one to fill an application

you might want to reconsider your pre-screening process.

my pre screening process saves me time from showing people the house who won’t like it and aren’t at all qualified

Before you even agree to show them the property, ask the right questions!

But my first SFH rental, I showed plenty of people who weren’t qualified and they tried to either explain their situation in the best light. I’m thankful I never rented to those people. I would’ve been doing them a disservice had I rented it out to them and I would’ve taken a hit.

“Oh can’t afford it? Well you’ll have to look for a home again soon as well as lose your security deposit once I’m forced to evict you”

Do you really want to be the guy who has to answer questions like “can I be late on rent with no penalty, we ran into some unexpected expenses and our poor baby got sick !” Or anything to that degree!

If you have trouble saying no to applicants because you feel for them in some sort of way...it only gets worse when they become tenants.

Dennis M. · Answer

I would probably take somebody on welfare that got 3X income before I’d take a person working for 18$ an hour who couldn’t meet the 3X rule . If they are strapped that month they are going to pay everybody else before they pay you , trust me .diapers Walmart  cable and cellphone bills will almost always get paid before the rent will

Lawrence Paul · Answer

Guess I might just be a little bit excited and anxious all at the same time.

Does anyone have list of red flags, green flags and other requirements for potential renters/screening?

Monica Dixon · Answer

So, I'm assuming the take away here is that if you set standards, the first person that has to follow them should be the one who set them.

Lawrence Paul · Answer

Thanks for all of the feedback, everyone!

New Applicant makes 2.5x rental income - Q's?

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