Should I accept these tenants?

Question

Hello. My wife and I recently purchased our first rental property in a rural Ohio town. We have remodeled the interior and have just started the rental process. Our first, and so far only, applicants are a couple with children. Here are my concerns:

They are relocating from out of state and do have employment. They have jobs lined up in Ohio but according to them, the jobs want them to be relocated before they start. They claim that they have enough for the first month's rent and deposit. My concern is that typically a job will hold your first check for a week or more so I'm wondering if they will have enough to pay August rent when it is due.
The other, more pressing concern is one of the applicants has some theft and fraud charges against them in the past. They are at least seven years old. This person also on a work-release program for child-support and walked away, was later charged with escape in 2009.

We are working with a property management team, and they have informed us that they had good references. One reference was from a previous landlord, but the others were from friends and/or co-workers. I'm not sure how reliable these references are.

We're just wondering where to go from here. Ideally, we would prefer to rent to someone with a clean background but know this isn't always possible. We're also concerned that it may take a while to get our property rented. Since this is our first rental property, we want to make sure we're not setting ourselves up for failure should we accept them. If you would not accept these tenants, how would appropriately phrase denying their application? Should we consider a month to month lease with them?

Any advice or suggestions would be greatly appreciated!

Marc Winter · Answer

If you didn't have concerns you wouldn't pose the question. Follow your gut. If you don't have enough applicants, lower your asking price. Most importantly, write down your application acceptance criteria and STICK TO IT. Remember the old real estate saying: the only thing worse than a vacant unit is a unit with a bad tenant in it.I'd pass on these guys.

Terrell Garren · Answer

Decline. My experience with out of state moves is they stay a year or less while they learn the area and find where they would like to live. New jobs are additional risk. Not to mention theft / fraud charges. A PM will approve anyone that can fog a mirror. I only use M2M leases as you can deal with misbehaving tenants immediately and most importantly, they know it.I wish you the best. Terrell

Caleb Heimsoth · Answer

@Brett Robison maybe I’m misunderstanding you but it doesn’t seem super clear to me. Was the one person convicted of some sort of crime or felony? If so, that’s a denial for me. What’s the rent and what’s their income?Moving from out of state isn’t necessarily a huge deal. Just get the employer offer letter and call the employer. I think references are generally useless. So I’d ignore those. How’s the credit look?

Shawn G. · Answer

@Brett Robison as @Lisa Stewart said, set your criteria and stick to it. Also charges are NOT the same as convictions, so be careful on how you word things. If all they have is charges with no convictions, there is nothing there. I would start with 3x income (verifiable of course). No Evictions EVER. And find out (if you don't already know) about criminal history laws in your state to see what you can ask about and use in offering housing.

Brett Robison · Answer

Thank you all for your replies. We were probably going to pass on them anyways, but we wanted to seek advice from the Bigger Pockets forums from others who have been in the rental property game for awhile. We're going to pass on these applicants and search for better qualified tenants. Appreciate all of your responses!

Anthony Wick · Answer

@Brett RobisonApplication denied. Applicants do not meet minimum criteria. An empty rental is better than having tenants that don’t pay rent.

Judy Parker · Answer

Deny these applicants and keep marketing the property until you find appropriate tenants. If necessary reduce the price. And when you do find tenants, make them buy insurance and name Landlord as an additional insured.

Thomas Cummings · Answer

Some states don’t allow you to look at criminal stuff older than 7 years. So make sure you aren’t violating any screening regs if you are using that. And what does the PM company think? I’d defer to them, assuming you trust them. It will be thier headache too.

Robert Kirkley · Answer

I would have to agree with many of the responses above. I have not owned a rental yet, but I would definitely wait for another qualified tenant to come along. I have heard too many horror stories of bad tenants ruining a year's worth of profit, so waiting a while longer for a qualified candidate will pay itself time and time again.

David Stumpf · Answer

Wait and find a tenant you are excited to rent to. It sounds like this applicant does not.