Tenant screening: which flawed applicant would you go with?

[Jacob Morgan]

I have a remodeled, multifamily building in an smaller, old railroad town which has been down on its luck for a while, but seems to be slowly improving. As such, the core neighborhoods are pretty scrappy looking and most middle class applicants I show the apartment to are often put off by the area. 

With this, I have a tougher time selecting the best fit tenant for my apartment openings. I try to employ strict screening criteria for applicants, including verified income 3x over rent, two positive landlord references, satisfactory credit situation (score above ~600 with no negative patterns established), no smokers, and no large dogs. For past openings, I've managed to find a suitable tenant within a month, but this time around, it's dragging on and my options seem to be narrowing. I'm realizing my criteria are probably too strict, or that the one size fits all approach doesn't work well for all of the square pegs I'm finding that need to be jammed into round holes. 

For those of you who have similar properties, what are your criteria for evaluating reliable tenants? Which of the above qualifications would you jettison? And which of the following applicant options would you have taken?

1) Parents & young son with adequate income, but credit scores in the mid 500s with several accounts in collections, currently living with a friend, also living paycheck to paycheck and needing to wait two weeks to sign the lease (to have funds available). Landlord references available. Declined on credit situation.

2) Professional couple together making six figures with new baby. Credit in 700s, savings available, but an eviction filing record found by Smartmove. Prior landlords hard to reach, including obtaining a statement about the eviction filing. Delay resulted in applicants selecting another property.

3) Young couple with adequate income, but only current landlord reachable (prior one lost house in foreclosure and left town). One of the two has credit around 500 and is very protective of sharing information (documents come heavily redacted). Living paycheck to paycheck. Declined on credit situation.

4) Latin american migrant family, supposedly with asylum grantee status. All are employed at a local manufacturer, one is on staff and with documented income, but the others working through a staffing agency which deposits pay to a debit card and produces no pay statements and will not answer specifics about pay (cannot verify income). Currently living with a co-worker, but only prior landlord reference is to a Spanish speaking household in NYC which I can't communicate with. Absolutely no way to verify anything else, especially from the home country. They provided current visas, so they appear to be legal, but that's about it.

5) Two guys going through divorces, one of which has a disability and is being assisted by a nonprofit paying the first month of rent and deposit for them. Both have adequate documented income, but one of them has credit in the upper 400s with several recent collections and a vehicle repossession. Neither has a rental history either since they were living with spouses that owned their own homes for many years. Declined on credit and lack of landlord references.

Does this crop of applicants seem typical to you guys? If you have any suggestions for me, I'm all ears!

[Jim K.]

That would be No. 4 for us. Call up the staffing agency and explain the situation, explain your minimum income requirement and ask if they meet it. The small agencies have in the past responded better to a yes/no inquiry than specifics. You can also look at the bank records if the debit card links to a bank account.

Our business model is always to look for long-term tenants who will take good care of the property we put them in, will keep us promptly informed when things go wrong, and don't cause trouble in the community. Families working to stay together are almost always really good candidates for us.