To Rent or Not To Rent

[Christopher Bell]

So I'm a bit of a newbie landlord and I have a listing that I posted in a lower income city in a better location. The prospective tenant had a low credit score in the mid 500s with a total of 5k a month in liabilities if they were to rent from me. Their income before tax is said to be 14k a month working a double shift. With that low of a credit score, should I accept them as a tenant? So far they are the only prospective bite but from cornavirus complications I think that's where credit score took the biggest hit. Should I be using their 2x shift income as their true income if they tell me that's what they plan to do? Any thought would be greatly appreciated. Also to add more color there are some accounts from 5 years ago that are delinquent but not in a large amount

[Christopher Bell]

Also some more color, the credit check showed past due balances before coronavirus.

[Bjorn Ahlblad]

@Christopher Bell Your applicant is only partly in charge as to whether or not they can work double shifts. If you score them on a single shift there is no money to pay all the bills plus rent. I would reject them and continue looking. That credit score is more than low and suggests they do not care about consequences.

[Nathan Gesner]

It sounds like trouble to me. I would only consider them if I were desperate and even then I would require them to pay a significant deposit of at least 2x the rent.

[Theresa Harris]

First, I am shocked at the numbers-$5K a month in liabilities and $14K a month in income!  As others said, the credit report shows an ongoing problem, not something recent.  How have they been doing recently?

[Christopher Bell]

@Theresa Harris still not well last bad payment was Mar 1. The income idk how legitimate it is or if it is really only half that.

[Theresa Harris]

@Christopher Bell  If the last bad payment was a week and a half ago, I wouldn't consider them.

[Andrew S.]

$14k per month is a very high income.  Most banks use 2 years to define stable income - is their $14k per month been ongoing for 2+ years?  2 weeks?  2 months?  

Comparably as an example, I've heard people say they make an annualized stock market return of 120% (much better than index funds) , by making 10% in one stock over one month with a small chunk of money.  Not equivalent to 120% on entire portfolio. 

[Whitney Hutten]

@Christopher Bell What are your rental criteria for this property? If you don't have any, make a list (and be reasonable for the type/class of property it is). If they don't meet the criteria, move on. We are getting closer to peak rental season... so hopefully you have reserves to last so you can place a great tenant then.