Slight Blemish on Tenant Application - What to do?

Question

Hi - I have a couple for a property that has a slight blemish on their application. Based on the below, would you rent to them?

1. Both Credit Scores above 600

2. Employment History Stable - Both have been at recent jobs + 2 years and before that at same job for 15 years. One individual is the primary bread winner and is in more of "commission" heavy position. If that were to go away, they'd really have to claw together rent.

3. Gross Income to Rent 4.2x

4. Net Income [After taxes & other W-2 Deductions] to Rent: ~2.8x

5. No Evictions & Clean Background

6. Red Flag is Prior Rental Reference where they've been a tenant for 3 years. Throughout 1 year they were consistently late but always made payment that month. They have not had a late payment in the last 1.5 years.

Matthew Farmer · Answer

Thanks Scott & Tyler! Really solid feedback. We really do try to stick to our criteria as much as possible, and well put Tyler...not everything is black and white.

We are considering this applicant because all of our other applicants have also missed our criteria in one fashion or another. We've had about 6 applicants at this point and the home has been available for a week. Property is in an "A" location, so our qualifications are reflective of that.

From our conversation with the prospect, they went through a Job change during that time which didn't go so well. They left a job of 15 years to try something different and it didn't turn out well. I tend to agree, they made it work and the prior landlord said they communicated and were transparent throughout the whole period...so that goes a far way in my book. Clearly they are accountable if they are trying to do that.

Tyler Clark · Answer

Hi,

I agree you should stick to your criteria, however in this business, nothing is ever black or white. From what it sounds like is the tenants are in pretty good standing and meet your standards 5 out of 6 points. Understand that everyone goes through hardships but at least they still kept up with their responsibilities. I will consider them, just make sure  you do your due diligence, and set up protection for yourself like a higher late fee, or larger deposit to protect yourself.

Scott M. · Answer

You can ask the tenant the reason the payment was late most months for a year as that may give you some valuable insight.  Digging into the details is important.  Not being late for the last 1.5 years would suggest they have corrected whatever the issue was that had them late (But they still paid).

Also, this would depend on other applicants and what can be expected for the area the home is in.  If low income area where you rarely see a score above 600 and late payments are common this wouldn't be an issue, in fact, a great tennat for that type of area.  If this is a class A area where 650+ scores are common and very few if any lates are the norm then you may want to take a different path.

Also, how long has the home been for rent?  Do you have other applicants?  All of this info would come into play.

Harry Gamble · Answer

@Paul Stamm agreed. Consistency with your criteria and keeping everything documented keeps you out of legal trouble.

Theresa Harris · Answer

If they haven't had a late payment in 1.5 years and even when it was late, they paid it that same month.  Yes.  Make sure you have a late fee (say $50) and apply it when they are late.

Paul Stamm · Answer

@Matthew Farmer

You need to figure out if this slight blemish is against your criteria of screening tenants. Try to stick with your criteria and don't steer away from it. If these tenants are against your criteria then think about rejecting them and find someone else. If you have no one else interested then dig deeper into this tenant and see if it is close enough to your criteria.