Should I approve this tenant?

Question

Roommate/tenant situation.

Tenant has job and fairly good income ($50K+). Room for rent: $400something. Could easily pay that.

Tenant has a small claims - dismissed case from 5+ years ago.

Tenant has a small claims from 10+ years ago from a lower income housing authority. I did not pull credit on them.

Tenant owned own house, sold it this year.

No rental references as they they owned their home.

The housing authority small claims case makes me nervous, but that's a very long time ago.

I'm thinking... approve them. I don't see a reason not to. Would you?

Steve Babiak · Answer

But only if it didn't turn into a foreclosure, or maybe even short sale ...

Rob K. · Answer

The income is good. The other stuff would make me nervous.

I think that if I were to have a roommate, I would be less interested in stuff from 10 years ago and more interested in the personality of the person that will be sharing my home.

My second concern would be collecting the rent each month and my first concern would be to safeguard myself from being raped and/or murdered at 4am.

Having previously owned a home is a plus.

Uwe K. · Answer

Yeah, being raped while sleeping... come on, it was a hard work day, wait until the morning... :)

Anyway, once had an applicant, couple, middle ages, both had jobs, came in Jaguar, well dressed (although I think it was after church), had their own house, everything looked fine until I dug deeper. 
Had their own house, were foreclosed on, I think there was even bankruptcy, although I may mix this up. Then they said the house wasn't even worth it anymore because of a moldy basement... They lived there long enough to have caused it. - Denied.

My point: Don't judge a book by its cover.

Jon K. · Answer

This person owned their home for over a year before the small claims housing case. That was about 10 years ago.

I've decided to approve them and do month-to-month.

They seem pleasant. Age difference is a little weird, but they were polite and the best candidate and everything else they told me checked out.

If they were my age, I probably wouldn't have as many second thoughts. But it's not we see each other that much, and this person is polite enough. And if they're not once they get here, it's 30 days notice and they're out.

Jon K. · Answer

I saw photos of their house when it was for sale on the market. Very clean and looked great.

I haven't asked them about the small claims yet.

10 years is a long time. I don't think there's a pattern of non-payment here-- 5-6 years since the most recent small claims. Only 2 (small claims collection case, small claim housing) ever.

How can I tell if the house they owned went into foreclosure?

It was on the market about a year. Sold to a real estate company that bought another house on that street. Looks like that real estate company buys houses and makes them corporate rentals.

William Bannister · Answer

Jon did u ask tenants your going to rent to what the small claims case was about. Maybe there explanation could help clear up your doubts or help you decide if you want them. On the edge potential tenants I usually ask them for a little extra security deposit. These people with 50k income sound able to easily handle 400 per month. The key is do they have a lot of monthly revolving debt that would eat up that 50k. It shows the pattern of there ability to make pmts or rack up debt.
  If they had a fat car pmt and tons of credit cards with balances I might be inclined to say no but if just the opposite low dti I would say yes.
   What happened 10 years ago I do look at that stuff and try to evaluate it. For example if the person was 22 when the stuff was on there record 10 years ago I would probably not hold it against them if it was civil.  A 10 year old housing claim Im not going to worry too much about. I do look for patterns of non pmt and patterns of things that could get you fired from job like bad driving record or numerous petty criminal charges.  For example you could do something like 550 to 650 credit score pays extra 100 dollars security dep.  650 to 680 fico credit score pays extra 50 dollars. Then if they have over a 680 just let them get into your unit if your comfortable with the rest of the back round check. Extra security on someone that is 500 to 550 credit score if you really want to go there ask for last months rent and a double security deposit. Money can buy there way into my units as long as they are clean on there criminal part of back round is good and arent totally tied up in court on numerous open cases.  Its nice all the data you can find online now on someone. Facebook,google,myfico.com,criminalchecks free.and so many others.
  I have also been known to ask to see there last place if I decide to approve them. Its like a last minute look as to how they live.

Jon K. · Answer

Ibrahim S

Hm... it looks like my county online has 1 database. I tried searching for "smith" and some of the cases were still open.

It also appears that my prospective tenant has a similar name to someone else. That may or may not be their small claims from the low income housing authority. My tenant already owned their own house when they were sued by the low income housing authority.

Ibrahim Hughes · Answer

In our county there are two databases: 1 for open cases and 1 for closed cases that either resulted in a judgment or were dismissed. The two cases you mentioned would be found in the 2nd mentioned system. Have you checked for open civil and criminal cases? Maybe they were a menace to their neighbors?

Jon K. · Answer

Gene Hacker

True about make-ready expenses. Mine is a roommate situation. So, usually I just have to vacuum the carpet in their room and clean their bathroom. Unless they cause damage, anyway.

Longer term would be better so I wouldn't have to keep finding people. Shorter term I've gotten lucky with so far-- no damage from short-term people I've had. The short-term people usually have little to no furniture to move in.

My deposits are only a few hundred. Rent is upper $400s. I probably should have a larger deposit, but since I'm living here too, I just gamble at hoping that they won't damage much with us both living in the same house.

Gene Hacker · Answer

There can be a lot of expense in getting a rental ready again for a new tenant.  If you have other applicants that want a longer term that could be worth considering.  Make sure you get a good deposit so they are motivated to give the place back in clean condition.

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