Author Topic: New Tenant  (Read 4734 times)

Euphorbia

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New Tenant
« on: December 20, 2019, 08:05:26 AM »
Looking for advice about a potential new tenant who is recently widowed but can pre-pay 6-12 months rent. Tenant has been a stay at home parent and we live in a HCOL area so even though house is modest, it is not cheap.  How can we protect ourselves as landlords. Having rent pre-paid for 6-12 months seems like it would offer protection.  A family member can cosign on the loan. Looking for advice. 
« Last Edit: December 20, 2019, 08:57:59 AM by Euphorbia »

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Re: New Tenant
« Reply #1 on: December 20, 2019, 11:29:17 AM »
What exactly are you concerned about?  If the potential tenant passes your normal screening process why are you conerned about this one in particular?

Just a warning - many municipalities will not allow a tenant to pre-pay rent more than a month or two, even if they want to.  It's designed to protect tenant from unscrupilous landlords.  So you might want to double-check the laws in your area so you don't run afoul of the law.

Euphorbia

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Re: New Tenant
« Reply #2 on: December 20, 2019, 08:49:52 PM »
The main concern is the person won't be able to find a job that pays enough to cover the rent in the long run.  This person would not qualify for renting the property under normal circumstances as they currently have little income.  They would be drawing on savings in order to pay the rent.

From viewing the credit report it looks like they lived just within or slightly above their means.  The only significant asset is their house which they sold and they had a huge amount of debt on it.

The tenant has a family member who can co-sign the loan which I'm thinking I should insist on.
« Last Edit: December 20, 2019, 09:05:08 PM by Euphorbia »

Bloop Bloop

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Re: New Tenant
« Reply #3 on: December 21, 2019, 12:47:17 AM »
I would say no. I don't know what "co-signing" means - does that mean the family member guarantees the loan? How would you even pursue the family member anyway? Sounds like a lot of potential enforcement costs/headache. I'd want an upfront payment of 12 months or just tell the tenant to nick off. As the other person mentioned, many jurisdictions (including mine) ban upfront payments of more than one month so my policy is simply that I only accept families with two working parents and at least one school-age child. I believe that from an actuarial perspective they are the least likely to default.

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Re: New Tenant
« Reply #4 on: December 21, 2019, 06:04:12 AM »
What is the prospective tenant's credit rating?  What are their references?  Living at or slightly above their means is pretty common.  The unknown is whether that will get better or worse now the prospective tenant is single, although you do have the co-signer to cover the chance that they won't be financially responsible.

What is the credit rating of the proposed co-signer and what are their references?  If the co-signer is someone you would be happy to rent the house to on the basis of their credit rating and references, and the prospective tenant is someone you would be happy to rent the house to on the basis of their personal references then I don't see any commercial reason to turn them down.

On a personal basis, you have someone whose partner/spouse has died recently and needs to get back on their feet and make a new life.  Do you like this person enough to give them that chance in your house? Or do you have other options for renting the house that seem better to you as landlord?

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Re: New Tenant
« Reply #5 on: December 21, 2019, 06:27:50 AM »
Would you be willing to offer a one year contract, to be reconsidered after a year to see if the person has gotten a job? You know the tennant has the means to pay for one year.

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Re: New Tenant
« Reply #6 on: December 21, 2019, 07:11:05 AM »
Pre-pay tenants are people that cannot qualify to rent.  That always ends badly.  I do not accept cosigners.  If the tenant cannot afford the property, the answer is no.  Cosigners are usually people trying to relieve themselves of a family problem and often do not perform. 

If you want to have fewer problems and a more profitable rental business, your rental policy from the beginning should be "no cosigners" and only tenants that can qualify on their own.  Once you accept a cosigner, you are at risk of a discrimination claim in the future if you do not accept all tenants with cosigners.

Bloop Bloop

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Re: New Tenant
« Reply #7 on: December 21, 2019, 06:14:08 PM »
What is a co-signer? I've never heard the term used in Australia. I assume a co-signer is just someone else who will owe you an unsecured debt if things go balls-up. As far as I'm concerned, unsecured debts ain't worth shit in this pro-tenant world and the only security you have is (1) screening applicants to make sure they seem like decent people and (2) making sure that any tenants you have are people with something to lose - e.g. a kid in a school nearby. That way you both have something to lose (the tenant has a lifestyle, you have a house). If you rent to people who've already struggled in life and have nothing to lose, you are setting yourself up for disaster.

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Re: New Tenant
« Reply #8 on: December 21, 2019, 06:45:53 PM »
It sure sounds like they'll be moving on at the end of the 1-year lease. Perhaps if I was desperate I'd go for a 1-year tenant, but since replacing tenants tends to be time consuming and expensive, I would pass on them if I could find someone with better prospects of being a multi-year tenant.

calimom

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Re: New Tenant
« Reply #9 on: December 21, 2019, 07:19:59 PM »
The main concern is the person won't be able to find a job that pays enough to cover the rent in the long run.  This person would not qualify for renting the property under normal circumstances as they currently have little income.  They would be drawing on savings in order to pay the rent.

From viewing the credit report it looks like they lived just within or slightly above their means.  The only significant asset is their house which they sold and they had a huge amount of debt on it.

The tenant has a family member who can co-sign the loan which I'm thinking I should insist on.

Does the prospective tenant still have children at home? Are they entitled to social security benefits? That is solid income, but if the tenant is older/children are older, that may not be the case. A job a SAHP might get after many years out of the workforce may not pay well, and even if there's a boost from the sale of a house or insurance proceeds, it may not fit in the rubric of what your rental income criteria is.

As a fellow widowed parent, I feel for this person, but they may be better suited to a lower cost apartment until they can get their feet on the ground. I also own rental properties and know you have to do what you have to do to get your business to run the way you need it to.

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Re: New Tenant
« Reply #10 on: December 21, 2019, 07:25:59 PM »
you should research your state laws.
you might be violating them by discriminating by marital or family status.

if this person has acceptable credit scores and can show you enough $ in the bank to pay a year's rent, you have to accept that if you would have accepted it as sufficient proof from a retiree or a trust fund kid or whoever else.

but if you require working paystubs no matter what, and your state landlord/tenant laws allow you to do so, well ok, maybe you aren't discriminating against the widow by requiring the same from her.

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Re: New Tenant
« Reply #11 on: December 22, 2019, 05:13:14 AM »
you should research your state laws.
you might be violating them by discriminating by marital or family status.

if this person has acceptable credit scores and can show you enough $ in the bank to pay a year's rent, you have to accept that if you would have accepted it as sufficient proof from a retiree or a trust fund kid or whoever else.

but if you require working paystubs no matter what, and your state landlord/tenant laws allow you to do so, well ok, maybe you aren't discriminating against the widow by requiring the same from her.

We would not accept money in the bank as proof of income from anyone.  If the retiree in your example can show monthly income history via regular portfolio withdrawals, an acceptable credit score, and a solid rental history, no problem.  We use credit scores and my guess is the OP's potential tenant is over leveraged and probably can't meet our requirement anyway.

Euphorbia

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Re: New Tenant
« Reply #12 on: December 22, 2019, 08:18:25 AM »
What is the prospective tenant's credit rating?  What are their references?  Living at or slightly above their means is pretty common.  The unknown is whether that will get better or worse now the prospective tenant is single, although you do have the co-signer to cover the chance that they won't be financially responsible.

What is the credit rating of the proposed co-signer and what are their references?  If the co-signer is someone you would be happy to rent the house to on the basis of their credit rating and references, and the prospective tenant is someone you would be happy to rent the house to on the basis of their personal references then I don't see any commercial reason to turn them down.

On a personal basis, you have someone whose partner/spouse has died recently and needs to get back on their feet and make a new life.  Do you like this person enough to give them that chance in your house? Or do you have other options for renting the house that seem better to you as landlord?

Credit score was good prior to the spouse dying two months ago. They missed one mortgage payment due to death of the spouse and loss of his income.  The tenant will walk away with about 200-300k of equity when they sell their house which is already pending, but I have concerns about the amount of debt they had. It was mostly the mortgage but there was other debt.  To me it looks like they were able to pay the bills but living a very inflated lifestyle. I also don't understand why they wouldn't have had life insurance. Seems very irresponsible.

Euphorbia

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Re: New Tenant
« Reply #13 on: December 22, 2019, 08:23:24 AM »
The main concern is the person won't be able to find a job that pays enough to cover the rent in the long run.  This person would not qualify for renting the property under normal circumstances as they currently have little income.  They would be drawing on savings in order to pay the rent.

From viewing the credit report it looks like they lived just within or slightly above their means.  The only significant asset is their house which they sold and they had a huge amount of debt on it.

The tenant has a family member who can co-sign the loan which I'm thinking I should insist on.

Does the prospective tenant still have children at home? Are they entitled to social security benefits? That is solid income, but if the tenant is older/children are older, that may not be the case. A job a SAHP might get after many years out of the workforce may not pay well, and even if there's a boost from the sale of a house or insurance proceeds, it may not fit in the rubric of what your rental income criteria is.

As a fellow widowed parent, I feel for this person, but they may be better suited to a lower cost apartment until they can get their feet on the ground. I also own rental properties and know you have to do what you have to do to get your business to run the way you need it to.

She is entitled to social security benefits but the amount is a little less than the rent.  Our house is the cheapest rental house you can find in our school district and the person would like to keep their child in the same school which I sympathize with.  She could get an apartment but it wouldn't be that much cheaper.

What we were considering was allowing her to rent for 6 months and then reassessing. If she has a good job at that point, great. If not then she can move on. She can move in with family but they live a few hours away. 

We can't legally ask for 6 months rent upfront. We can only ask for 2 months security deposit and one month rent per the state laws.

« Last Edit: December 22, 2019, 08:59:06 AM by Euphorbia »

Euphorbia

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Re: New Tenant
« Reply #14 on: December 22, 2019, 08:35:36 AM »
What is the prospective tenant's credit rating?  What are their references?  Living at or slightly above their means is pretty common.  The unknown is whether that will get better or worse now the prospective tenant is single, although you do have the co-signer to cover the chance that they won't be financially responsible.

What is the credit rating of the proposed co-signer and what are their references?  If the co-signer is someone you would be happy to rent the house to on the basis of their credit rating and references, and the prospective tenant is someone you would be happy to rent the house to on the basis of their personal references then I don't see any commercial reason to turn them down.

On a personal basis, you have someone whose partner/spouse has died recently and needs to get back on their feet and make a new life.  Do you like this person enough to give them that chance in your house? Or do you have other options for renting the house that seem better to you as landlord?

I don't know the person personally.  This situation fell on our lap because our current tenant who is moving out purchased her home.  She mentioned that she would need a rental and we were put in touch.  The deceased spouse was a high income earner and we live in a very high COL area. Although COL is high, job market is good and she has a masters degree (though not in use for many years). 

Euphorbia

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Re: New Tenant
« Reply #15 on: December 22, 2019, 08:39:51 AM »
you should research your state laws.
you might be violating them by discriminating by marital or family status.

if this person has acceptable credit scores and can show you enough $ in the bank to pay a year's rent, you have to accept that if you would have accepted it as sufficient proof from a retiree or a trust fund kid or whoever else.

but if you require working paystubs no matter what, and your state landlord/tenant laws allow you to do so, well ok, maybe you aren't discriminating against the widow by requiring the same from her.

I think we are ok here because the credit score dropped when they missed the last mortgage payment. But I appreciate the reminder because I'm an accidental landlord who has been very lucky with having great tenants.  I need to check the laws- are you saying that I could be considered discrimatory even if the person doesn't have income to cover the rent but they do have a cash stash?  In this case, I think I'd still be ok because the house isn't sold- it is pending and she doesn't yet have the cash reserves.

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Re: New Tenant
« Reply #16 on: December 22, 2019, 10:45:31 AM »
What is the prospective tenant's credit rating?  What are their references?  Living at or slightly above their means is pretty common.  The unknown is whether that will get better or worse now the prospective tenant is single, although you do have the co-signer to cover the chance that they won't be financially responsible.

What is the credit rating of the proposed co-signer and what are their references?  If the co-signer is someone you would be happy to rent the house to on the basis of their credit rating and references, and the prospective tenant is someone you would be happy to rent the house to on the basis of their personal references then I don't see any commercial reason to turn them down.

On a personal basis, you have someone whose partner/spouse has died recently and needs to get back on their feet and make a new life.  Do you like this person enough to give them that chance in your house? Or do you have other options for renting the house that seem better to you as landlord?

I don't know the person personally.  This situation fell on our lap because our current tenant who is moving out purchased her home.  She mentioned that she would need a rental and we were put in touch.  The deceased spouse was a high income earner and we live in a very high COL area. Although COL is high, job market is good and she has a masters degree (though not in use for many years).

The spouse was a high earner and a big spender.  That means she was probably a spender as well.  The money may all be gone before the year is up.  She may or may not be able to get a job.  She does not have one now.  What's the credit score?  You did check that, right?

My guess is if you take this risk, you will be in the unpleasant situation of evicting her for non-payment before the year is out.  You are not an experienced landlord and I don't think you have dealt with a difficult tenant situation.  In your shoes, I would let someone else take on this risk.

cchrissyy

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Re: New Tenant
« Reply #17 on: December 22, 2019, 11:03:39 AM »
you're probably OK as long as your rules are consistent. a specific credit score or number of missed payments is a fine cutoff and not discrimination unless you are making up the rules on the fly.

the thing about discrimination (by family status or anything else) is you can't have tougher application rules for that category of people, and you can't make their lease terms tougher like requiring a bigger deposit.

In my state source of income is protected, see below. IDK about other states.

If it is legal where you are, I still think you should be careful not to require sources of incomes that are really a signal of family/gender/marital status. Ask yourself honestly, would you accept other people living off savings? maybe a single guy going back to school for a year? maybe an author who took an advance? maybe a childless couple who sold their house to travel and wants to live in your town for a year for some reason?


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https://www.dfeh.ca.gov/Housing/
California law protects individuals from illegal discrimination by housing providers based on the following:

Race, color
Ancestry, national origin
Religion
Disability, mental or physical
Sex, gender
Sexual orientation
Gender identity, gender expression
Genetic information
Marital status
Familial status
Source of income
Citizenship*
Primary language*
Immigration status*

Euphorbia

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Re: New Tenant
« Reply #18 on: December 22, 2019, 12:21:56 PM »
What is the prospective tenant's credit rating?  What are their references?  Living at or slightly above their means is pretty common.  The unknown is whether that will get better or worse now the prospective tenant is single, although you do have the co-signer to cover the chance that they won't be financially responsible.

What is the credit rating of the proposed co-signer and what are their references?  If the co-signer is someone you would be happy to rent the house to on the basis of their credit rating and references, and the prospective tenant is someone you would be happy to rent the house to on the basis of their personal references then I don't see any commercial reason to turn them down.

On a personal basis, you have someone whose partner/spouse has died recently and needs to get back on their feet and make a new life.  Do you like this person enough to give them that chance in your house? Or do you have other options for renting the house that seem better to you as landlord?

I don't know the person personally.  This situation fell on our lap because our current tenant who is moving out purchased her home.  She mentioned that she would need a rental and we were put in touch.  The deceased spouse was a high income earner and we live in a very high COL area. Although COL is high, job market is good and she has a masters degree (though not in use for many years).

The spouse was a high earner and a big spender.  That means she was probably a spender as well.  The money may all be gone before the year is up.  She may or may not be able to get a job.  She does not have one now.  What's the credit score?  You did check that, right?

My guess is if you take this risk, you will be in the unpleasant situation of evicting her for non-payment before the year is out.  You are not an experienced landlord and I don't think you have dealt with a difficult tenant situation.  In your shoes, I would let someone else take on this risk.

I agree that they have been living high on the hog.  The credit score was perfect in terms of making pmts timely until last month when they missed the mortgage payment due to loss of spouse's income.  Obviously they didn't have any safety nets in place. 

We were considering a 6 months rental contract with 2 months prepaid (max allowed).  We would do a reassessment in 6 months and if the person doesn't qualify with their income at that point they would need to move out.  I really do not want to deal with an eviction type situation obviously. Do you think this would be too risky? 

There is an advantage for us also in waiting to open it up for rent in June as well, although I think we'll still be able to get a renter in the house pretty quickly no matter what time of year.
« Last Edit: December 22, 2019, 12:43:15 PM by Euphorbia »

Another Reader

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Re: New Tenant
« Reply #19 on: December 22, 2019, 12:53:43 PM »
I simply would not get involved in this situation in any way.  Put the property on the rental market as soon as you can.  If rental houses are moving quickly in your area, you should have a qualified tenant without all the baggage very quickly.

calimom

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Re: New Tenant
« Reply #20 on: December 22, 2019, 01:03:36 PM »
IF you can mutually agree on the 6 month term, I think this is a good risk. She will be taking care of her child and knows she has to be getting in the workforce in some fashion sooner than later. The social security income is a good base, and the remainder of the rent will be paid out of not insubstantial savings.

Agreed life insurance would have been helpful, but it's possible the late husband was un-insurable due to health reasons. It happens.

For you as the landlord, this transaction could be fairly seamless. You're not skipping a beat with vacancy, and the current tenant switching homes with the homeseller/possible new tenant could mean mutual respect regarding cleanliness and move-in ready houses.

Wrenchturner

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Re: New Tenant
« Reply #21 on: December 22, 2019, 01:15:44 PM »
Spouse died two months ago and they already missed a mortgage payment?

I simply would not get involved in this situation in any way.  Put the property on the rental market as soon as you can.  If rental houses are moving quickly in your area, you should have a qualified tenant without all the baggage very quickly.

This, get a different tenant.

Another Reader

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Re: New Tenant
« Reply #22 on: December 22, 2019, 01:32:38 PM »
IF you can mutually agree on the 6 month term, I think this is a good risk. She will be taking care of her child and knows she has to be getting in the workforce in some fashion sooner than later. The social security income is a good base, and the remainder of the rent will be paid out of not insubstantial savings.

Agreed life insurance would have been helpful, but it's possible the late husband was un-insurable due to health reasons. It happens.

For you as the landlord, this transaction could be fairly seamless. You're not skipping a beat with vacancy, and the current tenant switching homes with the homeseller/possible new tenant could mean mutual respect regarding cleanliness and move-in ready houses.

She has all this alleged money and she missed the mortgage payment last month.  Sorry, but this is a hard pass for me.

Villanelle

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Re: New Tenant
« Reply #23 on: December 22, 2019, 01:41:45 PM »
She doesn't meet your income requirements.  Don't even bring up any of the other stuff.  You have income requirements which she does not meet.

Unless you are having trouble renting the place or anticipate having trouble renting it, pass.  And mention nothing as a reason other than that you have minimum income requirement and she does not meet them.  (Or, if you have a minimum credit score requirement which she doesn't meet, even if she would have met it three months ago, you can mention that instead or in addition.)

calimom

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Re: New Tenant
« Reply #24 on: December 22, 2019, 07:24:11 PM »
IF you can mutually agree on the 6 month term, I think this is a good risk. She will be taking care of her child and knows she has to be getting in the workforce in some fashion sooner than later. The social security income is a good base, and the remainder of the rent will be paid out of not insubstantial savings.

Agreed life insurance would have been helpful, but it's possible the late husband was un-insurable due to health reasons. It happens.

For you as the landlord, this transaction could be fairly seamless. You're not skipping a beat with vacancy, and the current tenant switching homes with the homeseller/possible new tenant could mean mutual respect regarding cleanliness and move-in ready houses.

She has all this alleged money and she missed the mortgage payment last month.  Sorry, but this is a hard pass for me.

She didn't have all that money when she missed the mortgage payment. Her husband had literally just died. It took a bit to qualify for social security and to sell the house. During that time when she was in serious grief and trying to sort out her financial situation, the mortgage payment was missed.

I'm a business person and completely understand the separation of finances and emotion. But sometimes we do have to extend a helping hand to other human beings. This woman now has the funds to pay the rent for at least six months, and likely further, should the OP wish to extend the terms of the lease.

Wrenchturner

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Re: New Tenant
« Reply #25 on: December 23, 2019, 12:32:33 PM »
Sometimes we do have to extend a helping hand to other human beings.
Charity has a place in business but only when its boundaries are very explicit.  This doesn't meet the standard. 

For the sake of disclosure, I'm a tenant and have never been a landlord.

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Re: New Tenant
« Reply #26 on: December 23, 2019, 01:50:50 PM »
I was a bit surprised to read about the opinions of co-signing on here. Co-signing basically just means you're using another person's income and credit as qualifications, and to cover rental payments if the lessees cannot. I use co-signing when renting to student tenants and it's been working out fine. 3 years so far and not a single late payment.

Bloop Bloop

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Re: New Tenant
« Reply #27 on: December 23, 2019, 02:05:00 PM »
Unless a co-signer is required to physically caveat their property to the landlord, I don't see the point in having a personal right of action against someone for an unsecured debt. By the time you're taking enforcement action, you've already lost the game. Better to limit your tenants to people who have their shit together and have something to lose.

spartana

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Re: New Tenant
« Reply #28 on: December 23, 2019, 10:47:56 PM »
I suppose a person who is job hunting and willing and able to pay for a full year up front (whether legal or not in your state) is no greater risk then someone who pays monthly and is employed but then may  lose their job one month into a year lease. Or the FIREee with a passive investment income who loses it all in a recession (or cashes out and spends all on hookers and blow).  If at the end of the year she doesn't meet your lease renewal criteria then you can choose not to renew the lease. Although I'd check your state laws as I know there may be certain categories of people you can't evict due to non-payment.

ETA as a FIREd person who would have liked to rent and tried to pre-pay as a way show a landlord I'm not a security risk, I found it very difficult. As a long term homeowner and FIREee I didn't have the kind of references they wants, or current employment, or income. The fact that I had moolah enough to pre-pay didn't matter at all. So I do understand this woman's delimma.
« Last Edit: December 23, 2019, 10:56:28 PM by spartana »

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Re: New Tenant
« Reply #29 on: December 24, 2019, 01:50:32 AM »
I suppose a person who is job hunting and willing and able to pay for a full year up front (whether legal or not in your state) is no greater risk then someone who pays monthly and is employed but then may  lose their job one month into a year lease. Or the FIREee with a passive investment income who loses it all in a recession (or cashes out and spends all on hookers and blow).  If at the end of the year she doesn't meet your lease renewal criteria then you can choose not to renew the lease. Although I'd check your state laws as I know there may be certain categories of people you can't evict due to non-payment.

ETA as a FIREd person who would have liked to rent and tried to pre-pay as a way show a landlord I'm not a security risk, I found it very difficult. As a long term homeowner and FIREee I didn't have the kind of references they wants, or current employment, or income. The fact that I had moolah enough to pre-pay didn't matter at all. So I do understand this woman's delimma.
I was thinking of you specifically in this situation as you had mentioned how hard it was for you as a single woman with assets but no income to find a rental.

I sure hope this woman finds someone willing to give her a chance to prove herself and get back on her feet. I canít imagine how difficult it would be to lose so much so quickly, and then struggle to keep consistency in your childís life by trying to stay in th same school and keep that same support network.

spartana

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Re: New Tenant
« Reply #30 on: December 24, 2019, 08:24:06 AM »
I suppose a person who is job hunting and willing and able to pay for a full year up front (whether legal or not in your state) is no greater risk then someone who pays monthly and is employed but then may  lose their job one month into a year lease. Or the FIREee with a passive investment income who loses it all in a recession (or cashes out and spends all on hookers and blow).  If at the end of the year she doesn't meet your lease renewal criteria then you can choose not to renew the lease. Although I'd check your state laws as I know there may be certain categories of people you can't evict due to non-payment.

ETA as a FIREd person who would have liked to rent and tried to pre-pay as a way show a landlord I'm not a security risk, I found it very difficult. As a long term homeowner and FIREee I didn't have the kind of references they wants, or current employment, or income. The fact that I had moolah enough to pre-pay didn't matter at all. So I do understand this woman's delimma.
I was thinking of you specifically in this situation as you had mentioned how hard it was for you as a single woman with assets but no income to find a rental.

I sure hope this woman finds someone willing to give her a chance to prove herself and get back on her feet. I can’t imagine how difficult it would be to lose so much so quickly, and then struggle to keep consistency in your child’s life by trying to stay in th same school and keep that same support network.
I was actually surprised because I thought I would be an ideal tenant. But apparently being a single childless woman who was FIRE and hadnt had to work in a long time (no recent job history) and who was a long term home owner (no rental references) who bought her house with cash and had no debt (not much credit history) who had available cash plus investments that I could access easily to pay rent (or blow on shoes, purses and pool boys) wasn't as appealing to prospective landlords.  I get it but it was still surprising to me.
« Last Edit: December 24, 2019, 08:27:01 AM by spartana »

Villanelle

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Re: New Tenant
« Reply #31 on: December 24, 2019, 08:50:33 AM »
I suppose a person who is job hunting and willing and able to pay for a full year up front (whether legal or not in your state) is no greater risk then someone who pays monthly and is employed but then may  lose their job one month into a year lease. Or the FIREee with a passive investment income who loses it all in a recession (or cashes out and spends all on hookers and blow).  If at the end of the year she doesn't meet your lease renewal criteria then you can choose not to renew the lease. Although I'd check your state laws as I know there may be certain categories of people you can't evict due to non-payment.

ETA as a FIREd person who would have liked to rent and tried to pre-pay as a way show a landlord I'm not a security risk, I found it very difficult. As a long term homeowner and FIREee I didn't have the kind of references they wants, or current employment, or income. The fact that I had moolah enough to pre-pay didn't matter at all. So I do understand this woman's delimma.
I was thinking of you specifically in this situation as you had mentioned how hard it was for you as a single woman with assets but no income to find a rental.

I sure hope this woman finds someone willing to give her a chance to prove herself and get back on her feet. I canít imagine how difficult it would be to lose so much so quickly, and then struggle to keep consistency in your childís life by trying to stay in th same school and keep that same support network.
I was actually surprised because I thought I would be an ideal tenant. But apparently being a single childless woman who was FIRE and hadnt had to work in a long time (no recent job history) and who was a long term home owner (no rental references) who bought her house with cash and had no debt (not much credit history) who had available cash plus investments that I could access easily to pay rent (or blow on shoes, purses and pool boys) wasn't as appealing to prospective landlords.  I get it but it was still surprising to me.

I thought of you as well.

For me, the difference would be the credit score.  yes, this other woman supposedly only missed one mortgage payment.  But prior to that, she was living close enough to the edge that she didn't have any cushion when her life fell apart around her (through no fault of her own I feel the need to acknowledge). 

If she actually pays the entire lease up front (not just 6 months) and puts down a security deposit, as well as having a cosigner, admittedly there isn't much risk.  But I feel like this is a woman who lives life on the financial edge, even prior to this situation.  That's not who I'd choose as a tenant.  Since the most the OP can legally do is a 6 mo lease w 2 months prepaid, however, nearly all of the same risk applies.  She asked it "we" think that's too risky, and for me, it would be. 

KBecks

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Re: New Tenant
« Reply #32 on: December 24, 2019, 09:39:35 AM »
IF you can mutually agree on the 6 month term, I think this is a good risk. She will be taking care of her child and knows she has to be getting in the workforce in some fashion sooner than later. The social security income is a good base, and the remainder of the rent will be paid out of not insubstantial savings.

Agreed life insurance would have been helpful, but it's possible the late husband was un-insurable due to health reasons. It happens.

For you as the landlord, this transaction could be fairly seamless. You're not skipping a beat with vacancy, and the current tenant switching homes with the homeseller/possible new tenant could mean mutual respect regarding cleanliness and move-in ready houses.

She has all this alleged money and she missed the mortgage payment last month.  Sorry, but this is a hard pass for me.

I can see how a family in crisis would get behind on bills for one month, especially with all the emotions and things to take care of.  If I lost my spouse, I might not be on top of everything right away.

That said, it doesn't mean this situation is the best one for the landlord to take on.  Landlord, find your best option and go with that.


ysette9

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Re: New Tenant
« Reply #33 on: December 24, 2019, 02:40:45 PM »
My mother was in the home mortgage/refinance business way back in the day. I remember telling me about one woman who had to write a letter as part of her mortgage application to explain a previous bad mark on her credit history. She had lost her husband and in the subsequent months after his death had gotten behind on her bills due to grief. It wasnít an indication of her normal financial behavior but an extraordinary circumstance from which she was able to recover. She got her loan.

spartana

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Re: New Tenant
« Reply #34 on: December 28, 2019, 09:05:28 AM »
I suppose a person who is job hunting and willing and able to pay for a full year up front (whether legal or not in your state) is no greater risk then someone who pays monthly and is employed but then may  lose their job one month into a year lease. Or the FIREee with a passive investment income who loses it all in a recession (or cashes out and spends all on hookers and blow).  If at the end of the year she doesn't meet your lease renewal criteria then you can choose not to renew the lease. Although I'd check your state laws as I know there may be certain categories of people you can't evict due to non-payment.

ETA as a FIREd person who would have liked to rent and tried to pre-pay as a way show a landlord I'm not a security risk, I found it very difficult. As a long term homeowner and FIREee I didn't have the kind of references they wants, or current employment, or income. The fact that I had moolah enough to pre-pay didn't matter at all. So I do understand this woman's delimma.
I was thinking of you specifically in this situation as you had mentioned how hard it was for you as a single woman with assets but no income to find a rental.

I sure hope this woman finds someone willing to give her a chance to prove herself and get back on her feet. I can’t imagine how difficult it would be to lose so much so quickly, and then struggle to keep consistency in your child’s life by trying to stay in th same school and keep that same support network.
I was actually surprised because I thought I would be an ideal tenant. But apparently being a single childless woman who was FIRE and hadnt had to work in a long time (no recent job history) and who was a long term home owner (no rental references) who bought her house with cash and had no debt (not much credit history) who had available cash plus investments that I could access easily to pay rent (or blow on shoes, purses and pool boys) wasn't as appealing to prospective landlords.  I get it but it was still surprising to me.

I thought of you as well.

For me, the difference would be the credit score.  yes, this other woman supposedly only missed one mortgage payment.  But prior to that, she was living close enough to the edge that she didn't have any cushion when her life fell apart around her (through no fault of her own I feel the need to acknowledge). 

If she actually pays the entire lease up front (not just 6 months) and puts down a security deposit, as well as having a cosigner, admittedly there isn't much risk.  But I feel like this is a woman who lives life on the financial edge, even prior to this situation.  That's not who I'd choose as a tenant.  Since the most the OP can legally do is a 6 mo lease w 2 months prepaid, however, nearly all of the same risk applies.  She asked it "we" think that's too risky, and for me, it would be.
I did have very good credit but it wasn't from a lot of things  just high limit CCs that I had always paid in full each month and rarely used - which seemed to be another red flag.

I think it was just the unusualness of my situation combined with not understanding where my income came from at my age. But in the OPs case he/she knows and understands this woman's situation and can base the decision of her credit worthiness and ability to pay rent long term on that more easily. She might end up being a big problem down the road though and I personally wouldnt rent to her - but then I wouldn't rent to myself ;-) - unless there was a way to guareentee she could pay. It could still be a problem if someone cried discrimination because the OP wouldn't cut the same deal for them.

« Last Edit: December 28, 2019, 09:07:46 AM by spartana »

Bloop Bloop

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Re: New Tenant
« Reply #35 on: December 28, 2019, 04:57:08 PM »
This is what happens when states pass "tenant-friendly" laws banning large upfront deposits. It makes it impossible for worthy tenants to give the landlord a sense of security.

My state has also made long-term leases pointless (because the tenant ALWAYS retains a cheap way of breaking a lease, but the landlord is beholden to it) so I only ever offer 12-month leases. Why should I offer a 60-month lease that binds me for 60 months but only the tenant for 12 months? Another stupid "pro-tenant" law that has perverse consequences.

Euphorbia

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Re: New Tenant
« Reply #36 on: December 29, 2019, 01:40:22 PM »
Thank you everyone for the advice. It was very helpful.  We did offer a 6 month lease that would be reassessed at the 6 month mark but came back with some stronger language about the tenant needing to meet the income requirement at that point to be renewed. The tenant chose another property.  I feel ok about how we handled it- with compassion but also without sacrificing our own interests.  We still have a mortgage on the property and are far from being financially free.  I really hope this person can turn their situation around and find security.

We listed the property and by the next day we already had 4 people lined up for showings, plus others out of state who are interested. 
« Last Edit: December 30, 2019, 07:17:17 AM by Euphorbia »