Evaluating prospective tenants

[Stachetastic]

I have a vacancy in a single family (3/2) that is proving to be very popular. I held an open house this weekend and ended up with 10 completed apps. Rent is $650 and tenants pay all utilities. Pets are addl fees.

I have 2 families that seem to be the most viable:

1. Young newlyweds, no pets. Gross annual income ~$35k. Currently paying the same rent + utilities where they live.

2. Older gentleman and granddaughter, who is POA and moving in with him to keep an eye on him. She is 20 y.o. and works retail. Gross annual income totals ~$55k, most of which is his retirement income. Three small pets.

Obviously the higher income would be best, but I'm concerned about how long a 20 yr old would want to reside with Gramps. Also, she has an eviction from a few years ago when a roommate supposedly flaked out on her. Gramps also has 2 civil suits from 10+ years ago that he owed money to people for. Details are otherwise vague.  Young couple has no evictions, etc.

[salmp01]

Personally, I wouldn't allow a tenant that had an eviction on their record to live in one of my rentals. What are the credit scores on the other applicants?  Any criminal background?  What have their previous landlords said about their tenancy?

[Stachetastic]

Personally, I wouldn't allow a tenant that had an eviction on their record to live in one of my rentals. What are the credit scores on the other applicants?  Any criminal background?  What have their previous landlords said about their tenancy?

No criminal background issues with any of them. I do not run credit checks, as RE is so cheap in this area that most people buy if they are able. I am calling current landlords today. I'm leaning toward the younger couple, but am concerned about their low income.

[Another Reader]

Run credit checks and get scores.  Not doing that is extremely risky.

$650 rent and a stable $35k income is perfectly acceptable to me.  And they have no pets.

[BigHaus89]

Run credit checks and get scores.  Not doing that is extremely risky.

$650 rent and a stable $35k income is perfectly acceptable to me.  And they have no pets.

Agreed.

The first couple seems to have much less potential issues.

[CowboyAndIndian]

I am calling current landlords today.

Don't just call the current one, call the previous one also. The present landlord may want them gone and may give them a good review.

[norabird]

I have rent at that level and just slightly above that salary (but have had that salary for many years). It was never ever a strain to make rent. Based on the rent I bet it's a very LCOL area too. So #1 is absolutely a safe bet.

[thor800]

What area is this ?

Is $35K salary low for the area ?  Are both newlyweds working ?

[Stachetastic]

Thanks for all the replies! 35k is actually a good salary around these parts, and that was for just one tenant. The spouse did not work. Unfortunately, they bowed out due to some very recent health issues, and we passed on the second applicants due to a poor reference from the granddaughter's current landlord. All other applicants had very low incomes--17k, 20k annual household income. Back to the drawing board!

[OkieStache]

I don't know that 20k in income is too low for a $650 property.  That might make the cut if credit, criminal, and residential histories all came back good.

The key is to have established, written, minimum criteria.  Have a process for evaluating tenants against your objective criteria and stick to it.  I have had several inquiries regarding fair housing issues and having those records and objective reasons for denial saved the day.  In my experience, the lower the price point and the COL area the more likelihood of similar issues.

Good luck!

[Stachetastic]

I don't know that 20k in income is too low for a $650 property.  That might make the cut if credit, criminal, and residential histories all came back good.

I'm loving all the feedback on this forum! Can anyone tell me a good guideline for income for potential tenants? Does it make a difference that these particular tenants have been at their workplace for less than 6 months, and only one of them is working at all? Or that rent includes no utilities, and tenants are responsible for gas, electric, water, and sanitation?

Thanks so much!