Should I rent to someone with bad credit

[Elbutcho]

The people that applied have ficos in the 500s. They have over accounts in collections, debt discharged through bankruptcy, 30 days past due.................Risk Level: very high

I know the times are tough and this is probably a widespread problem but................

What say you?

[Diddlybo]

Nope. Let somebody else deal with that problem.

[GuitarBilly]

I wouldn't. A lot of people have bad credit right now due to the mortgage crash, they ended up with a foreclosure on their record...I guess I'd overlook that because it happened to so many people. But if this person has multiple negative accounts, that's a different and a more serious problem...

[wrongnote85]

that's a negative there cap'n.

[Pepi]

NO NO NO and NO

[EndTime]

My renter has horrible credit.. Going on 2+ years with basically zero issues with just a few late payments here and there, which she convered the late fee.. She has a steady job, which is the main reason i went ahead with renting to her..

Although, looking back almost all my applications had bad credit or were section 8.. Gotta just take a chance with someone, and kinda hope for the best..

[Marc G]

if you have lots of offers don't do it.... if you need the money and you can get them to sign a rental agreement that's iron clad about late payments etc I say get your first and last month rent and enforce the late payment clause.

[Casey4s]

We are living in very trying times financially in this country, so every person with questionable credit is not necessarily a bad person. Sometimes some of us need to extend a hand of trust to folks in trouble and hope it will be well accepted and that the person will make every effort not to disappoint us. On the other hand you have to use a degree of prudence in accepting risk for your own and your family's financial health and security. After looking at what you have said about the credit situation with this applicant I would say this would be a very bad risk, there is just too much dirty laundry.

Just my humble opinion . . .

[PurpleTrails]

As a landlord myself, I'd say no in this case. Too many different indicators that given half a chance they would stiff you. My current tenants had some pretty bad financial stress, but it was mostly caused by getting upside down in a house and having their adjustable mortgage blow up on them, basically causing them to default and go through bankruptcy. Other than that they had really good job history and a good credit record until things went wacky in the recession.

[Lloyd Blankfein]

I'd get a Huuuuuuge security deposit and make sure the insurance is paid.

At that point, who gives a fuck. If they skip town, you got a huge amount of dough for free.

If they burn it down, it's insured.

Drive by once a week and keep an eye on their progress in fucking your house up.

[~Abstract~]

How the fuck does someone have enough brains to acquire a second property...but not enough brains to know who to keep out of said property?

[Elbutcho]

How the fuck does someone have enough brains to acquire a second property...but not enough brains to know who to keep out of said property?

Really........well thanks for the advice Dr Phil....

[Elbutcho]

Thanks for the advice guys...........just looking for a little help guiding my decision and wanted to see if any of you had similar situations and how it played out.....I'm sure there are people with bad credit are not irresponsible and maybe just got caught up in this fucked up economy.......I asked her to explain these blemishes on her credit..............most of them are not recent only 2 the rest are 5 or more years old

[rear naked]

How the fuck does someone have enough brains to acquire a second property...but not enough brains to know who to keep out of said property?

This


The answer is NO, or this:

I'd get a Huuuuuuge security deposit and make sure the insurance is paid.

At that point, who gives a fuck. If they skip town, you got a huge amount of dough for free.

If they burn it down, it's insured.

Drive by once a week and keep an eye on their progress in fucking your house up.

[indienoise]

Is property management your primary source of income? If it's kinda what you do, I guess you could stand to take the risk.

Are you trying to get out of a house you're currently living in, or are otherwise personally, financially tied to? No, no, no, NO! I went that route with someone who was a relatively good risk and it still cost me over 10 grand and set me back 4 years, so far, in the housing department.

[Elbutcho]

Is property management your primary source of income? If it's kinda what you do, I guess you could stand to take the risk.

Are you trying to get out of a house you're currently living in, or are otherwise personally, financially tied to? No, no, no, NO! I went that route with someone who was a relatively good risk and it still cost me over 10 grand and set me back 4 years, so far, in the housing department.

No not my primary source of income...........and yea you're right it is a nightmare when it goes bad

[GuitarBilly]

Thanks for the advice guys...........just looking for a little help guiding my decision and wanted to see if any of you had similar situations and how it played out.....I'm sure there are people with bad credit are not irresponsible and maybe just got caught up in this fucked up economy.......I asked her to explain these blemishes on her credit..............most of them are not recent only 2 the rest are 5 or more years old

yeah that's the main thing, talk to her and see what story is.... stuff like multiple maxed out credit cards that went unpaid etc are a no-no... but things like a foreclosure, or medical bills collection, that happens to a lot of good people and can be overlooked, I think it's all a matter of looking at each case individually and assess your risk.

[benjamin801]

Speaking from the other side of this discussion for a minute:

In 2010, my then-fiancee (now wife) and I were the renters with bad credit. I had a 2005 bankruptcy on my records in the wake of my divorce, and she had been a struggling single mom (widowed) basically forever, and had defaulted on a rental agreement at one point in the mid-2000s. Even though by that point in 2010 I had a steady, well-paying job and had been squeaky clean since the Chapter 7, and she was freshly graduated from nursing school (and thus eminently employable), we looked horrible on paper.

The one shitty apartment complex that would have us demanded first and last months' rent upfront, and the deposit was a half month's rent as well on top of that. We bit down hard, took it, spent a year among absolute ghetto trash, and hopped to a better situation exactly a year later, with our year of perfect rental history in hand.

Moral of the story? We were solid people who looked bad on paper because of some old circumstances (in her case) and old mistakes (in mine). The landlord who took a chance on us made pretty damn sure to leave no way to get burned by us, we took it gratefully and used it as the hand up that it was. You could do a lot worse than to follow their example.

[Elbutcho]

Speaking from the other side of this discussion for a minute:

In 2010, my then-fiancee (now wife) and I were the renters with bad credit. I had a 2005 bankruptcy on my records in the wake of my divorce, and she had been a struggling single mom (widowed) basically forever, and had defaulted on a rental agreement at one point in the mid-2000s. Even though by that point in 2010 I had a steady, well-paying job and had been squeaky clean since the Chapter 7, and she was freshly graduated from nursing school (and thus eminently employable), we looked horrible on paper.

The one shitty apartment complex that would have us demanded first and last months' rent upfront, and the deposit was a half month's rent as well on top of that. We bit down hard, took it, spent a year among absolute ghetto trash, and hopped to a better situation exactly a year later, with our year of perfect rental history in hand.

Moral of the story? We were solid people who looked bad on paper because of some old circumstances (in her case) and old mistakes (in mine). The landlord who took a chance on us made pretty damn sure to leave no way to get burned by us, we took it gratefully and used it as the hand up that it was. You could do a lot worse than to follow their example.

She said she was getting out of a bad marriage and owned several properties and had several accounts together..............didn't have a choice per my lawyer other than to file the bankruptcy.

[sleewell]

I would not if you care about your property.

[Lloyd Blankfein]

Speaking from the other side of this discussion for a minute:

In 2010, my then-fiancee (now wife) and I were the renters with bad credit. I had a 2005 bankruptcy on my records in the wake of my divorce, and she had been a struggling single mom (widowed) basically forever, and had defaulted on a rental agreement at one point in the mid-2000s. Even though by that point in 2010 I had a steady, well-paying job and had been squeaky clean since the Chapter 7, and she was freshly graduated from nursing school (and thus eminently employable), we looked horrible on paper.

The one shitty apartment complex that would have us demanded first and last months' rent upfront, and the deposit was a half month's rent as well on top of that. We bit down hard, took it, spent a year among absolute ghetto trash, and hopped to a better situation exactly a year later, with our year of perfect rental history in hand.

Moral of the story? We were solid people who looked bad on paper because of some old circumstances (in her case) and old mistakes (in mine). The landlord who took a chance on us made pretty damn sure to leave no way to get burned by us, we took it gratefully and used it as the hand up that it was. You could do a lot worse than to follow their example.

That's all? Shit I have spotless credit and the house I rent required first/last and 2x monthly rent for security.

I guess that's coastal CA for you baby.

[soulsurfer]

Most ppl rent their property strictly for business reasons, not moral ones. It's not that landlords need to be jerks, tho they have the right.
However, who they rent to is based on sound business. (or they will be educated to do so the next time 'round) and the human element, tho' present, plays second fiddle.

There is no fool-proof way of determining whether someone will be a good tenant. BUT -Credit checks are one way to help landlords educate themselves to make smart decisions about who the rent to.
When a landlord finds less-than-favorable credit ratings it is up to him to make the best business choice FOR HIM...not the potential tenant.

If the landlord is renting for humanitarian reasons, there are still costs of ownership that must be covered. Maintenance, repairs, taxes, mortgage (if there is one) etc. and someone has to cover those costs.

[Redbowties88]

As a businessman? Fuck No.

I'm a landlord by profession. I own/run a small family built mobile home park.

We try to help people out with bad credit when we can. Times are bad for individuals and businesses alike....we try to make decesions more on a personal feel though and also while considering just how bad their accounts are. References are a big help, this is a small town so if you can come up with a reference I know and trust I generally take their word for it.

To be perfectly honest I've rented to people who were scumbags with perfect credit and people with no credit who paid early every month and were the sweetest people on earth. More times then not though when taking a chance on someone you're going to get burned. So take the risk knowing full well the time and cost involved in an eviction that you will NEVER recover from these people.

[Redbowties88]

Speaking from the other side of this discussion for a minute:

In 2010, my then-fiancee (now wife) and I were the renters with bad credit. I had a 2005 bankruptcy on my records in the wake of my divorce, and she had been a struggling single mom (widowed) basically forever, and had defaulted on a rental agreement at one point in the mid-2000s. Even though by that point in 2010 I had a steady, well-paying job and had been squeaky clean since the Chapter 7, and she was freshly graduated from nursing school (and thus eminently employable), we looked horrible on paper.

The one shitty apartment complex that would have us demanded first and last months' rent upfront, and the deposit was a half month's rent as well on top of that. We bit down hard, took it, spent a year among absolute ghetto trash, and hopped to a better situation exactly a year later, with our year of perfect rental history in hand.

Moral of the story? We were solid people who looked bad on paper because of some old circumstances (in her case) and old mistakes (in mine). The landlord who took a chance on us made pretty damn sure to leave no way to get burned by us, we took it gratefully and used it as the hand up that it was. You could do a lot worse than to follow their example.

I'm glad it worked out for you, but to make a correction to the statement in red...

There's basically no way first+last month's rent plus 1/2 is going to even come close to covering the total losses had you decided to just stop paying. That's not even taking into account possible damages to rented property (although it is much easier to recover damage losses then back rent and legal costs)

Again I'm glad your situation worked out but the OP should be aware that even collecting a big deposit there is still quite a lot of risk.

[Elbutcho]

As a businessman? Fuck No.

I'm a landlord by profession. I own/run a small family built mobile home park.

We try to help people out with bad credit when we can. Times are bad for individuals and businesses alike....we try to make decesions more on a personal feel though and also while considering just how bad their accounts are. References are a big help, this is a small town so if you can come up with a reference I know and trust I generally take their word for it.

To be perfectly honest I've rented to people who were scumbags with perfect credit and people with no credit who paid early every month and were the sweetest people on earth. More times then not though when taking a chance on someone you're going to get burned. So take the risk knowing full well the time and cost involved in an eviction that you will NEVER recover from these people.

Do you use a property mgt company or do you take care of the listing and admin yourself?