I brought a brand new home, mortgage is 1400, been on the ads for over 2 weeks. The same block with 6 other homes for rent. I have mine up for 1500 but 6 other put their up between 1300 to 1400. so far only 1 person applied. The credit is 520 with previous evict in 1988, collection on 2 credit cards. from 1999 and 2001. I am desperate to rent this one out but afraid of going to court for eviction.
should I rent to this bad credit person? I asked for 2K deposit and it as okay. should I take a chance on this one?
deffense
Deffense,
What does their credit look like since 2001? Are they trying to mend the bad credit? Are they relatively current on their other bills?
Are they employed? Have you talked with the employer? Do they make a salary to support the payments?
Are they ‘swimming’ in debt or do they have a decent income to debt ratio?
Many folks with bad credit HAVE to rent, they have real trouble borrowing.
If there were a lot of positives in the answers to these questions, I might take a chance on them (make sure you get the deposit in cash, money order, or certified funds!).
A credit score of 520 to 540 is what I find renters have. I jump up and down with 560. Look at his recent credit, and lenght of time on the job. If it is less than 2 years previous job. Also look to see if the last job is doing the same thing this job does. Also if you want $1400 rent, he must have over $5000 per month income.
Talk to his references at his job and previous landlords.
Also as soon as you can in your state start eviction. In Texas on day 6 I send him a 3 day note asking him to pay or get out. He owes the rent and late fees and I will not take the late payments as a check. Cash, money order or cashiers check. This is because if he is already 10 days late, I will no know that his check is bad until the end of the month. I start eviction as soon as he is late. When I talk to him about his situation, I am very nice and understanding. I give him advice and am very friendly. Afterall we are still negotiating for the rent. I do, however, make no concesions on giving me the rent in the terms stated in the lease. If he gives me partial rent, I take it and continue with evition. I apply all paymentss to late fees and penalties first and then rent. The judge in Texas will not evict on fees, but he will on rent.
520 is not that bad for a renter, and an eviction in 88 was a long time ago. It sounds like that person learned a lesson and has put together more solid rental history since then. My rule is no evictions in last 7 years. No real reason, just what I chose and stick with. I also like to see 3X the income/month of the rent amount. I don’t think your applicant sounds that bad, but check their references and go with your gut.
I place the most importance on what the previous landlord says. Granted the previous landlord may have hidden motives but just by asking a few simple questions you can usually get a good feel (you are a landlord too after all).
I believe that most people with bad credit will skip paying their credit card or car payment without blinking an eye but few will skip paying the rent. Everyone needs a roof over their head.
I too live in Texas and the courts here are very landlord friendly. If rent is not received on the 1st I send a late payment reminder. If it is not received by the 5th I send a 3-day Notice to Vacate (required by state law). I also only accept cash, cashiers check or money order at that point.
Failing that, I then start with the eviction process. This can take 20 days. So your basically out a months rent. That is why it is so important to start as early as possible. Usually it is better to just offer the tenant a carrot instead and have them sign an Agreement to Vacate.
I had a tenant who couldn’t pay, she was really down on her luck. I knew she didn’t have any money to rent a more affordable place or a hotel for that matter. So I offered to give her most of her security deposit back if she could be out by that weekend. It worked. I got my property back on the market a lot sooner than I would have if I had gone the eviction route.
First go read this thread to learn something about evictions.
http://www.dfwrein.com/megabbs/thread-view.asp?threadid=1231
I like tenants with longevity on jobs and at previous addresses. I do not like tenants that have been living with relatives or just started a new job or career.
I had a case like this. What I did was to collect the first month and security deposit, plus the 12th month in advance. I had them sign a statement that they acknowledged the extra rent was for the 12th month only, that it was paid as an inducement for me to overlook their bad credit, and that they would forfeit it if they paid any other month late or had to be evicted.
I don’t know how enforceable that is, but hopefully having the extra month sitting out there will encourage them to pay regularly.
What you DON’T want is for them to ever say “We can’t pay this month, so just use that extra month or our security deposit for the payment.” Never, never, never do that. Evict them instead.
Actually I never had to evict. I pay them to move out. “If you are out by the first, I will give you $500” or whatever amount works. That way they won’t trash the place. If that does not work, I will evict.