would you rent to unemployed service worker

Question

I've got a vacant unit I'm trying to rent and most applicants seem to be unemployed or furloughed due to Covid-19.

Applicants show several months savings and can do first month's rent and deposit. Some applicants have cosignors. All claim to have good credit scores and excellent rental history. (no background checks as I don't do unless I want to accept them) These individuals are getting unemployment and likely the additional $1000/mo ck from government aide program.  I can continue to have vacant unit and wait for the desired employed applicant and continue to miss the rental income until ...?, or I could rent to one of these individuals or couples and get income rebooted right away. It does seem that if an unemployed applicant fails to become employed, they will simply claim they can't pay rent, and being in the state of Oregon, that is perfectly legal. For how long I don't know.

I'm curious if anyone has relaxed tenant qualification standards due to current widespread hardships.

Joe Splitrock · Answer

@Genna Golden this is a tough situation. In my state it is legal to accept advance rent, so I would require 6 months rent in advance. I am not sure if that is an option in your state of operation. It would reduce risk greatly if you could do that.

If I could afford it, I would hold out for an employed tenant. I would even reduce rent or offer something like a free month to get an employed applicant. I know the government implies this will be "over" soon, but what they means it full lock down will end. We will not see large social gatherings come back for 6-12 months, so anyone employed at those types of places will not be working. Why take on the risk of a future problem?

Nathan Gesner · Answer

It depends.

What was their employment history prior to COVID-19? Did they work the same job/career for many years or were they bouncing around trying to find themselves?

What's their credit like?

How strong are their Landlord references?

I want renters with current jobs. HOWEVER...you can't base you decision on what factor. You need to look at the whole person. I rented to a guy with bad credit and he was new to the area with no job lined up. That sounds risky, right? It is! But I mitigated that risk through a double deposit, they paid the entire year of rent up front, and I increased the number of inspections. They were a great tenant.

Albert Ng · Answer

I would base the decision on how easy it is to evict someone in your area (or how tenant friendly). And I would get the maximum allowed security deposit, last month rent .... the more the better, as you don't know if they will be paying next month, nor if you will have any recourse if the local government decides to stop eviction.

David Barnett · Answer

I would stick to 2.5-3X rent as monthly income.  If they don't make that each month, I'd likely pass.

Larry Fried · Answer

Unless you are prepared to subsidize these renters going forward as a means of helping out, I wouldn't rent to someone currently unemployed in this enviroment.

Stephen Keighery · Answer

@Genna Golden I wouldn't. The fact that you can't evict at the moment and the danger of them struggling to find a job. Unemployment is generous and easy right now but that may change. I would keep looking for a better tenant.

Kyle J. · Answer

@Genna Golden I wouldn’t change my normal screening criteria. I want tenants who meet my criteria currently, not in the past or in the future.

There are tenants out there who are still working. I just had a vacancy last month and I had plenty of applicants through the doors who were still employed, and I ended up renting the property in a matter of days to some very qualified tenants.

I’d also be asking myself, if these applicants aren’t working, why are they moving? It’s expensive to move, so is it because they can’t afford their current place and negotiated with their landlord to leave? Perhaps there’s a good reason, but you don’t want to inherit someone else’s problem. So I’d definitely make sure I did extra thorough screening on anyone who isnt working and claims to need to move right now. Granted there could be a valid reason, but it just seems like odd timing.

Personally I wouldn’t do it. I’d rather have a little longer vacancy than take the risk on a potential bad tenant. Especially right now when you can’t evict in most places.

Account Closed · Answer

I wouldn't either.  They could move in and then take advantage of the no evict edicts.  Heck, maybe that's what they just did - moved out of one place and now they're moving into yours.  Most landlords won't give you the truth about a current or past tenant anymore, either.

I know it's a tough situation, needing the rent, but it would be worse to end up with someone who might not pay and tie the unit up for months, and then leave you with more painting and cleaning to do.

And now more than ever, you really need to think about why people are moving.  Sorry you're dealing with this.

Eric James · Answer

Are you allowed to discriminate against sources of income? This has been discussed recently with regard to section 8. But in many states maybe this applies to unemployment income as well.

Steve Smith · Answer

Jack, I agree with being uneasy about your choices. I do not have hard numbers but from overall the tenants I got that fit my 'best in class' standard were the ones that not only paid on time, but no drama, damages and left the place in great condition. Many of them I was willing to go back to them after the first year of leasing and give them a lower rent rate for the next few years to keep them around. Turn costs are the heaviest costs so I am willing to lower rents by $50 under market when I saw how long my average vacancy was for and how much the lease up and turn (rent ready) costs were. If it cost $1,000 to re-paint clean etc. and was vacant five weeks, it was well worth it to lower their rent by $50 a month for two years (1,200 cost) to avoid the cost and hassels.

would you rent to unemployed service worker

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