I didn't have a credit card in college. Neither did a lot of my friends. Our credit reports were blank.
Suppose I applied as a tenant for a property you own back then. How exactly would my credit report have helped you?
Great question. I actually wrote a post about it a while ago. You would have been VERY high risk. No score could be 700+ in a few months, or a disaster in the making. In many areas, you cannot make the screening decision based on the age of the tenant. People that fall off the credit radar have no scores too. Some people are all cash. A 40 year old with no credit needs to have the same criteria as the 18 year old one. I like tenants that have a proven track record of responsibility.
http://www.nononsenselandlord.com/2014/03/risk-of-tenants-with-low-credit-score-explained/If you also had a criminal record, combined with no credit score, no rental history, likely not great employment, I would likely pass on you. Or go with a larger deposit and a month-to-month lease.
Profitable landlording is all about mitigating risk. I would rather exclude nine great tenants in an attempt to keep out the one bad one, than let the nine in along with the bad one. There are far too many tenants out there to try to take in a risky one.
With this tenant the OP posted about, a young person might have one misdemeanor now, but what will it be in another year. At 18 your criminal record gets wiped clean. Will there be more drug charges? Maybe DUIs? Maybe driving after revocation? Maybe drug dealing? A felony possession charge? Or did he learn his lesson?
It may be best to let someone else take a chance on this one for a few years.
But that is what makes great landlord stories and creates a high return for the successful RE investors. If all tenants were great, it would only give a 5% return, not a 20%+ return.