I am looking for advice on my soon to be adopted tenants?

[Christopher Curry]

I have an owner finance deal about to close where I was adopting the tenants who have a lease going until August. Those tenants want out and their kid his wife and three kids want to take their place, relocating from Denver. I did background checks and they have over 20k in collections, they pay their vehicles on time, they both have jobs, credit is 620. Is that to much of a red flag or is it more common than I thought for perfectly nice folk to be that deep in collection? Should I hold the parents to their lease and say no to the young family? Help?

[Charles Carillo]

@Christopher Curry

620 credit and $20k+ in collections is a red flag. For me to rent to them, they would need a large security deposit AND the parents would need to cosign.

"Statistically speaking, 28% of consumers with credit scores in the Fair range are likely to become seriously delinquent in the future." (This is too much risk (for me) without a cosigner)

https://www.experian.com/blogs...

[Richard F.]

Aloha,

With $20 K collections, you shouldn't even be wasting your time posting the question.
Here are your odds:

 

[Steve Milford]

Treat each party as an individual application. Me? I would probably let the inherited tenants out of the lease if raising the rent was possible to closer to market conditions. Would I rent to the kids? Probably not. I am less concerned about credit score versus collections (aka stiffing other people). Rent will likely be their biggest bill and one of the first to go delinquent when times are tough.

[Tony Ngo]

Hi Chris - double check of what the 20K collection for.  Most of time, we stay away from collection tenants.   May be it can be medical bill collection and they have good reason for it.   If so, you would need good amount of deposit to accept them.  If you place the rent a little below market, you would good a good amount potential tenants from screening.