Should I Approve to Reject This Applicant?

Question

I have a tenant with first, last and security deposit on hand and is willing to get her mother to sign a notarized statement that she provides for her daughter and helps with her bills that is the good news the bad news is her income is low as compared to the rent, basically her income is about the same as the rent. The rent includes everything except for electric, cable tv or internet and whatever other utilities are available. My question is should I take the $2,100 first, last and security deposit and see if she makes good on the rent or flat out reject her due to lack of income? The rent is $600 per month and includes everything except electric. Her income is $700 per month, she applied on facebook and her facebook isn't scary, like a couple others who inquired but failed to follow through. She has been super motivated from the beginning and wants the place. The rental is in Pennsylvania and she has a small child and I am not sure on the rules if she were to stop paying rent say in the dead of winter would Judge reject the eviction until the Spring? She seems to mean well and if I get her Mother to agree to be on the lease with her would I than be able to attach her mother in a eviction case should it come to that? Her mother has a good job at local well known employer, I believe the daughter wants a better place to raise her daughter and understand the reason for the move from her current living situation which is subsidized housing in a not so good area... She claims she has saved the $2,100 by saving money because her rent is $0 per month. What do you all think I should do?

Account Closed · Answer

This is a simple hard pass for me.  My first qualifying event is income in the amount of 3 times the rent.  Why would you even continue down a path of someone that makes 1 time the rent?

I recommend setting some objective criteria so you don’t have to spend time worrying about stuff like this.  So things like income requirements, no evictions, yes or no to animals if so what types are a no go, previous landlord referral, job verification.  You take a thing and it is a yes no criteria. If you don’t get all the items as a yes then move on. My screening goes something like this.

Place ad

1.  Get inquiry (random questions or repeating questions whatever doesn’t matter), I answer new questions and then generic response email.

2. Generic response (email text phone script) asking all the above questions. If they answer positively to all of the questions then we move forward.

3. Can either show property or if they are super into the property I will send them a online background check. (Application is 40 dollars to apply), my cost to run the background check.

4.  Show the unit if they want it, they either have put in the formal paper application and if they haven’t done the online background one they do that as well.

5. Their credit comes back it either is above the line or below it, if it is below the line they are sent a denial letter. If they met the criteria and passed all the other items they are offered the property.

6.  Property stays up online and continue to show the property until a nonrefundable deposit is made, that buys them 24 hours to bring the first last and security deposit and sign a lease.

7.  Property ad gets taken down and tenant gets keys to their new home.

Everything is a system or a checklist or however you want to express it.  Landlording can be as objective as you want it to be.  Don’t be swayed by the “stories” or empty promises.

Dennis M. · Answer

@Kyle J.

Agreed this is way wAy beyond where the income needs to be ! You should be looking for 3X the rent for monthly salary . 2.5 X is sometimes okay in tough neighborhoods .

David Lee Hall, III · Answer

So, let's say the mother gets hit by a bus tomorrow, who is paying the rent in November given that currently she pays $0 and her income is the same as your rent. Okay, so she pays you, then they shut off the electric and she has to live in the dark.

If you want to help her, see if you can recommend a better place than she is now versus putting yourself at high risk of trouble.

Brian OShea · Answer

have you exhausted all possible avenues to get a different tenant? No I haven't put it out there long at all

Chris Martino · Answer

Hi @Brian OShea, have you exhausted all possible avenues to get a different tenant. There are a ton of marketing channels to advertise the unit for free including facebook, zillow, craigslist, instagram, apts.com, and local online sources. It would be better to wait a month and have a list of 3 qualified candidates than to settle for someone that does not meet your criteria.

Brian OShea · Answer

Thank you for your replies. In this town I have come across landlords who take no security deposits and wonder why their places are filthy and getting destroyed by pets and people. I know because they were selling and I saw first hand. Also quite a few in town rent under what I'm asking and barely breakeven, some have to be losing money. I bought it low enough that once it's rented my ROI is 20% the first year obviously I want to rent it quickly but don't want to have to incur a quick 4k in repairs and have to evict them. I'll keep looking.

Kyle J. · Answer

Of course she WANTS the place. But her wants, as well as her mother’s notarized letter for that matter, are not going to pay the rent.

Most landlords require applicants to make 3x the monthly rent amount in income. I’ve never heard of any landlord anywhere requiring only 1x the rent amount in income. There’s a reason for that - there’s no way the applicant could afford to live.

Should be a hard pass on this one.

Karen Jackson · Answer

I’m not sure how much of a rush you’re in to rent this apartment. But I would explore other applications. I personally wouldn’t take that chance. It’s a little to risqué..protect your investment. Like my father (a seasoned investor) always tells me you can’t feel sorry for any tenant. At the end of the day this is your business! I’m not sure how they do it in Philly but I’m NY you would usually have to make 30-40x the rent to qualify. maybe keep that in mind when analyzing their income.

In addition, is she receiving any child support? Or any supplemental income. And if so how much?

Brian OShea · Answer

Is the baby's dad paying child support? that is a question I have yet to ask and will ask after she returns my email.

"don't see how $100 a month is going to pay for food, child care and the bills" my point exactly

The rent is $600 with the mother's name on the lease, I would not rent without it and the notarized letter of support.

Brian OShea · Answer

This is not about helping her, it is about getting it rented and having some income coming in. The rental is in western Pennsylvania in your neck of the woods, as you know there are plenty of rentals and plenty of houses for sale at all price points, others in the area settle for $450 and even $400 per month with everything included, I don't know how they breakeven... My point is I doubt her mother would want an eviction filed against her, I need to ask if her mother owns her own home or rents it. If she rents her own home having an eviction would be the kiss of death and I would think she would help pay an electric bill here or there. The tenant is on food stamps but she is still in the process of filling out the application so I don't know everything yet. Parden my ignorance and lack of education but my concern is if I had to evict would a judge being there is a child under the age of 10 wait till spring to evict in the state of PA?

Should I Approve to Reject This Applicant?

Most Popular Reply