I have a house that is for rent now and I had an applicant that was not a good applicant. She offered deposit and 3 months of rent up front. Most landlords would jump at taking all that money, but unless she allowed me to use those additional 2 of those months as deposit I am not willing to take her. What will happen is she will pay me those 3 months and the fourth month I won’t see any money just excuses and have to start eviction. I am not falling for it.
Almost all landlord errors come from either greed or laziness. The applicant waves all that money under your nose and your greed won’t let you walk away from it.
I have a fight over my house. I show my houses twice a week. When someone calls and wants to see the house I tell them 6:00 Wednesday or 2:00 Saturday depending on when they call. Both showed up the same time Saturday and I gave them both applications. Both appilcations were good so I awarded the house to the first one that I got in. When I told the seond family they missed out because of the time they offered me to pay $100/month more.
Even though you did tell applicant #1 they could have the place, well, applicant #2 does have a better deal for you. You don’t have anything in writing with either applicant yet, I assume, accept for applications…so you are not contractually bound to give applicant #1 the house until the lease is signed and the deposit & first months’ rent are both paid.
It is LOGICAL to pick applicant #2, since you’ll get $100 more a month.
Logic always wins in a decision like that.
However … here’s how I would handle it. I would stall applicant #1 for as long as needed, and get the lease signed, the deposit and the first month’s rent from applicant #2 ASAP - and then AFTER THAT tell applicant #1 that something came up and they were not approved afterall due to situation X. Situation X … is something you’ll need to come up with. Look for any flaw on their credit report or rental history. Most renters have something. Be nice about it, apologize, and let them move on.
I let in the first approved application if they’re ready to move fwd. If they don’t have the deposit money, I move on. Obviously everyone would like extra money so that would mean applicant #2, but I just do things in order. I would stick with applicant #1 - all things being equal. If they were the first to get approved and have the deposit money, they would be my choice. If there was a legitimate reason to deny them, then fine but I wouldn’t necessarily go looking for a reason just to go with #2. That’s just the way I would want to be treated if I was applicant #1.
My word is my bond and if I told an applicant they were approved…they are approved. They can still disqualify themselves by not providing the deposit on time or signing the lease but I am not going to backtrack because someone else offers more money.
I agree with Pete, but not necessarily Justin. First of all, I don’t always go with just the 1st person that comes along. I think that is the sign of a lazy property manager (Sorry Justin - just calling it like it is). I always tell all my applicants that I plan to choose the best of all the applicants within a few short days of collecting applications from each of them. I do not collect deposits or background-check fees until I have chosen what I feel will be the best fit for my home.
I have been renting homes for over 20 years and only had 2 evictions. The times that I got burned was when I went against my gut feeling and rented to my second or third choice because the unit was vacant. Don’t rush it and don’t be greedy.
That being said, I agree with Pete - if you have already given a verbal yes to Applicant #1, then give them 1st option. You can also be up front with them and tell them about Applicant #2 offering $100/mo more for the place. Be sure to explain that you are not trying to re-negotiate anything with them, just that you have another applicant that is willing to pay more. This may coax Appl#1 to say that they are willing to give the place up to Appl#2 for whatever reason. If they still want/need the unit, then you start off your relationship well with them, because they know that you are a man of your word and will probably go the extra effort to care for your property.
Next time you rent, though, go with the best applicant, not the 1st to put down a deposit. And ALWAYS run credit checks/eviction history/criminal background checks/employment verification before signing anything.
That’s a good business model. I’ve found the best candidates are routinely the first ones to answer my ads. Waiting around for someone “better” is the amateur’s approach.
Of course I never turn anyone down, and I naturally sift for the prospects with the most cash to give me and the longest term they’ll agree to. I like 24-month terms with 5% minimum over-retail rents. I get that from the tenants with credit hiccups that want a nice place to live. I offer a hierarchy of qualifying hurdles that I allow each tenant to decide if he wants to climb, or not, but I don’t turn them down. It’s a self-qualifying procedure.
AAA tenants with small deposits are the ones that if things go bad, they’ll go really bad. Adding insult to injury I don’t get the extended leases, or the higher rents from AAA prospects. As a result, I don’t settle for the tenants with spotless records. I’m looking for the one that get turned down by the competition; the same ones that give me what I want for the price I want it.
There’s a sweet spot that lays somewhere above chronic dead-beat and below AAA tenants. And that’s where you can make the most money in the shortest amount of time.
As an aside, here in California, they’ve interfered with the free market on deposits. So I can’t legally rent to the higher-risk tenants I did just five years ago, because the state won’t allow me to collect the deposits I used to, to overcome the risk. So, instead I am forced to legally rent to better tenants, and collect smaller deposits. Of course I have an elegant way around California’s micromanagement of my business, but that’s for another thread.
AdvRentals,
Well, I did say I take the first approved application if they’re ready to move fwd. By approved, I mean that I’ve already done income verification, talked to the local HUD office if applicable, and run a civil/criminal background check thru the county Sheriff’s office. I do have requirements, don’t always let the first person in, and sure the hell am not lazy. I do not run credit checks. I am a realist and expect my applicants will have garbage credit.
There’s obviously more than one way to do things. I choose to do it this way so things are in order and there’s never any need for explanation as to why I chose someone over another applicant. If someone is approved and gives the deposit money, I’m not going to make them jump over any other hurdles.
I agree. But, it also depends. What does their application look like? What does their credit bureau tell me about them? How is their presentation? I had this younger black guy with baggy gangster clothes looking like someone from a rap video fan a bunch of hundreds and ask if I’d give him the apartment today without going through the process. Fanning those bills really burned at me and I’m thinking who the hell is this idiot?? My place is not a fleabag motel that anyone can get into by putting money down. I’m very selective. I can almost guarantee the guy would have trashed the place and brought in a nasty drug element with him. I’d rather have it empty than give it to a drug dealer. So, I get what you’re saying by not falling for greed.
I also have a three page application and if they only fill out 20% of the lines they’re outta here. I wonder why some people even bother showing up if they’re gonna leave 80% of the application blank? Do they really think it’s just about coming up with first and last?
Also, another thing I look at is if the addresses on the credit bureau match the ones on the application, especially within the last couple years. And if not, why did they hide it?
On the other hand, I’ve had guys who’ve gone through bankruptcies or some other rough patch, yet showed up well dressed, had a great explanation of how they got there and where they going in life and I let them in and they have a clean apartment and they were not deadbeats.
I look at it like a job interview. Give me two guys with a not so perfect credit history/background and generally speaking I’ll choose the one with the better presentation over the extra money and in the end I’ll also be coming out ahead.
I feel sorry for you if you base a application on credit reports. Did you know that there at least or more then 80% errors on consumers credit report. Good income will over ride bad credit any day.
If there are errors on someone’s credit report, it is up to applicant to file a dispute and get it corrected. I do. If someone is so lazy that they don’t care about their credit report to get it fixed, why would they care to not screw you over? Also, if you give them an eviction notice for something, you loose a lot of leverage in getting them to consent to moving out voluntarily if you’ve determined that they don’t care about what shows up on their credit file. I feel sorry for all the money you’ve lost by letting in tenants that you have no leverage over when they decide to attack your pocket book on the whim.
We had tenants with high credit scores and perfect credit that trash our units. So where do you draw the line? A consumer with good credit and low income is a BIG risk.
That’s crap. I’ve been in the rental business for over 16 years and not once have I encountered someone with a fico score of 700+ that trashed a place or even had low income for that matter. What’s low income anyway? Single person making $25K/yr? Anything under 700 is high risk. Even bankrupts can get their credit score over 700 if they know what they are doing in building credit and there is still some leverage for me because two bankruptcies get stuck on a report for 14 years so they’ll be very reluctant to go into a second one or risk getting their credit score screwed up again with a judgment on their bureau after all the time and money spent on getting it over 700.
I don’t base my decision solely on credit scores. There may be other factors in their presentation as to why I would let them in with a credit score under 700 or I might even require a guarantor of someone with a fico score of 700+ that has assets. Just add them to a lease as a joint tenant and you can go after the guarantor for damages like, for instance, a university student who has their parents as a guarantor and the parent is listed as a joint tenant.
It all needs to be evaluated on a case-by-case basis. Credit scores are not a hard and fast rule where I would draw the line, but it’s a very good method. Credit scores are based on statistical analysis comparing the credit patterns of hundreds of thousands of credit files. There is a common theme to consumer credit behaviors. FICO scores are not randomly pulled out of a hat. It’s a pretty good predictor and these bureaus wouldn’t be making the kind of money they do from large corporations that keep coming back for their analysis if the reports were wholely random and inaccurate and not worth the 2 cents it was written on.
I understand where you are coming from. We look at credit reports everyday and we experience people with bad credit and good credit. Over the pass 15 years as a property manager over 4 complex with a total of 1100 units I have seen it all. There is no way to know if a person with good credit or bad credit will trash your unit or not. Remember FICO is a third party that create scores for the bureaus. Most of our tenants are Hispanics and they are the best paying tenants.
So…which applicant did you go with Bluemoon? And what was the reasoning? Considering that the title of this thread is “Greed” and your original post was to point out the downfall of accepting advanced rent payments, I’m guessing you choose the first applicant.
I have not gotten back in because I am enjoying the discussion. There is no right answer but I took the first family but for other reasons. The reason I took them is because the first guy had a better job. Another thing is that problem people are problems because they don’t do money very well. A person that offers to give you more money than you ask for knows they have problems. When I tell a person with crappy credit I need a double deposit these guys are used to being treated like that and are not offended. That is a sign of trouble to me.
When I bought this house in December it had a tenenat in it paying $900/month. My note is right at $700 and this new guy will be paying $1150. It is a confortable amount for him and I make a decent amount off if it.
Ive had 2 situations like this…the first was the guy trying multiple times to write me a check for deposit and 1st months rent before I even handed him an app. The 2nd was a lady that walk through my place in such a hurry it was like she was looking for the exits then tries handing me $1000 in cash.
Neither got me to sign leases…people like that just feak me out to the point Id rather they not even take apps with them.
As time go on there are renters that do things different then most people. We have one that pay us $500 month more then the rent and pay us in cash one year at a time. They wanted no employment check. They been renting from us for 3 years now. I tell everybody don’t judge a book by its color.