Author Topic: Would you rent to this tenant?  (Read 8420 times)

stachestash

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Would you rent to this tenant?
« on: May 18, 2015, 12:54:27 PM »
I'm fairly new at landlording and not sure how to qualify this applicant to rent my condo.  Here is the info:

Verified President of a 90 year-old family business (where he has worked for decades)
Credit score = Excellent
Proof of funds = Copy of non-retirement brokerage with sizable assets.
Income = claims 110x monthly rent but does not want to verify with tax returns (So I should basically ignore this.)
Reference = current landlord (also in my condo) says he pays rent one week early and takes very good care of apt. (moving only because current landlord is selling unit).
Impression = Met in person and he seems respectful, responsible and personable.

Can anyone chime in whether or not the proof of funds and good reference from another owner in my condo offsets the unverified income.  It feels like this should be okay. Would you rent to him?


« Last Edit: May 20, 2015, 05:35:41 PM by stachestash »

KCM5

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Re: Would you rent to this tenant?
« Reply #1 on: May 18, 2015, 01:11:44 PM »
Ummm...why would this not be a slam dunk?

stachestash

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Re: Would you rent to this tenant?
« Reply #2 on: May 18, 2015, 01:15:37 PM »
It feels like it should be but I'm not experienced in being a landlord and just want to make sure I'm not missing anything.  All online sources and landlording books suggest tax returns as proof of income. 

KCM5

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Re: Would you rent to this tenant?
« Reply #3 on: May 18, 2015, 01:20:10 PM »
Oh, I'm just inserting myself into something I know nothing about, so please ignore!

But really, he seems like an ideal tenant. Verified business, significant assets that could cover rent for more than the length of the lease, reasonable reason for moving, pays rent on time. So what if he doesn't want to provide tax returns? It's not like he's a presidential candidate ;)

joshbrand111

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Re: Would you rent to this tenant?
« Reply #4 on: May 18, 2015, 02:51:50 PM »
Slam dunk!  You could always asks him for his most recent copies of a pay stub.  He may be more inclined to show you that information.

His credit score is great, which means he probably does not over extend himself on obligations he owes.

stachestash

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Re: Would you rent to this tenant?
« Reply #5 on: May 18, 2015, 02:55:35 PM »
I asked him for pay stubs but said he doesn't receive them so that's when I asked for tax returns, which he didn't want to share. He runs a decent sized family business.

Also, thanks for the feedback.  It feels like he'll be a great tenant.  I've been burned before by a tenant with large proof of funds and great credit but she took off after just 3 months.  The problem with that tenant was that she didn't work and wasn't tied to the area except for a boyfriend.  This tenant is tied to the area because of family and his job.
« Last Edit: May 18, 2015, 02:59:30 PM by stachestash »

joshbrand111

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Re: Would you rent to this tenant?
« Reply #6 on: May 18, 2015, 03:04:28 PM »
At the end of the day you have to also trust your gut.  People can look great on paper.  If the market is good in your area find another tenant if the income verification is holding you up. 


stachestash

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Re: Would you rent to this tenant?
« Reply #7 on: May 18, 2015, 03:09:39 PM »
I agree about trusting your gut but I'm posting on here hoping that a seasoned investor or two can chime in on what they would do in this case.  Can proof of funds replace the need for income verification while still being a responsible real estate investor?
« Last Edit: May 18, 2015, 03:19:44 PM by stachestash »

Bobberth

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Re: Would you rent to this tenant?
« Reply #8 on: May 18, 2015, 03:15:48 PM »
Most people look for 3x to 3.5x the monthly rent in income.  If he has $600k in a non-retirement account, you have something to collect from if you need to evict & sue-that's better than a lot of tenants out there.  Just make sure you get the appropriate information up front-a copy of the account to keep, social security number, drivers license etc.

Sounds like a good one except...why does a guy like this want to rent a place instead of buy?  But if he's been renting thus far, it may not be an issue but it is interesting.

Gone Fishing

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Re: Would you rent to this tenant?
« Reply #9 on: May 18, 2015, 03:19:35 PM »
You could do MUCH worse!

stachestash

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Re: Would you rent to this tenant?
« Reply #10 on: May 18, 2015, 03:25:11 PM »
If he has $600k in a non-retirement account, you have something to collect from if you need to evict & sue-that's better than a lot of tenants out there.  Just make sure you get the appropriate information up front-a copy of the account to keep, social security number, drivers license etc.

Good point, Bobberth! I'll make sure that the non-retirement account number is not redacted and have copies of the appropriate information.  Thank you.

So Close - Totally agree.
« Last Edit: May 18, 2015, 03:26:48 PM by stachestash »

Rubic

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Re: Would you rent to this tenant?
« Reply #11 on: May 18, 2015, 05:02:36 PM »
The credit score alone would qualify him if I were the landlord.

NoNonsenseLandlord

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Re: Would you rent to this tenant?
« Reply #12 on: May 18, 2015, 05:37:23 PM »
Credit score is the main indicator I look at.  With an 800 credit score, he will go without food before he does not pay you.  And he has plenty of assets, so likely he does make what he says.  Or look at a bank statement or pay stub. 

Get a higher deposit, or a month-to-month lease if you are really that worried.

stachestash

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Re: Would you rent to this tenant?
« Reply #13 on: May 18, 2015, 06:05:27 PM »
Credit score is the main indicator I look at.  With an 800 credit score, he will go without food before he does not pay you.  And he has plenty of assets, so likely he does make what he says.  Or look at a bank statement or pay stub. 

Get a higher deposit, or a month-to-month lease if you are really that worried.

Got it, I appreciate th perspective.  I'll put more weight in credit score for this tenant and future tenants.  Pay stub was my first choice for proof of income but he doesn't get pay stubs apparently b/c it's a family business.  I like the higher deposit idea though.  Thanks No Nonsense Landlord!

math-ya

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Re: Would you rent to this tenant?
« Reply #14 on: May 18, 2015, 07:25:53 PM »
make him sign the lease before he finds another place

Another Reader

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Re: Would you rent to this tenant?
« Reply #15 on: May 18, 2015, 07:48:18 PM »
BS he does not get pay stubs.  How is he paid?  Did you run his credit and criminal background check, or did he provide you the information?  Did you get a copy of the driver's license and verify the SSN?  We run everything and do not accept tenant-provided reports. 

I'm in the minority here, but I would NOT rent to him without more independently verified information.

Cathy

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Re: Would you rent to this tenant?
« Reply #16 on: May 18, 2015, 08:20:13 PM »
In many states, most employers are required to issue paystubs. In California, Cal. Labor Code 226 requires the provision of paystubs to employees, and the only apparent exception is for "any employer of any person employed by the owner or occupant of a residential dwelling whose duties are incidental to the ownership, maintenance, or use of the dwelling". However, some cursory research suggests that other states do not require paystubs at all, such as Mississippi, and other states require it in general but have broader exceptions than California. So, depending on the state, the claim that the prospective tenant does not receive paystubs may not be "BS".

Landlords who are overly demanding with invasive requests are likely to miss out on wealthier tenants who are not interested in complying with that kind of nonsense. Anybody can make a house available for rent on the market; it's no indication that the landlord is an ethical person or that the landlord practices reasonable security measures with respect to tenant information. Basic security practices dictate providing the landlord with as little information as possible. The free market goes both ways: you can insist on invasive practices, but then you'll miss out on people who have lots of options and don't need to rent from you or from anybody, which isn't necessarily a bad thing if that's what you want.

Another Reader

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Re: Would you rent to this tenant?
« Reply #17 on: May 18, 2015, 08:33:29 PM »
Cathy is most likely NOT a landlord.  The information I list is not invasive or overreaching.  It's what every major property management company in Arizona and California requires. 

Wealthy does not necessarily make a better tenant.  I recall several stories of high-end townhomes and houses in the Oakland hills being trashed by celebrity sports star tenants in the 80's and 90's.

bacchi

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Re: Would you rent to this tenant?
« Reply #18 on: May 18, 2015, 09:59:54 PM »
In many states, most employers are required to issue paystubs. In California, Cal. Labor Code 226 requires the provision of paystubs to employees, and the only apparent exception is for "any employer of any person employed by the owner or occupant of a residential dwelling whose duties are incidental to the ownership, maintenance, or use of the dwelling". However, some cursory research suggests that other states do not require paystubs at all, such as Mississippi, and other states require it in general but have broader exceptions than California. So, depending on the state, the claim that the prospective tenant does not receive paystubs may not be "BS".

It could also be that he's not a W2 employee.

joshbrand111

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Re: Would you rent to this tenant?
« Reply #19 on: May 19, 2015, 09:07:36 AM »
If you have any other qualified tenants I would go with them.  Seems a little sketch he is not willing to show you the information you are requesting.  You have to protect your asset.  I have had many potential tenants that sound good on paper, but ,my gut is telling me something different.

I have also found that a good tenant doesn't always equal a good credit score. 

beltim

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Re: Would you rent to this tenant?
« Reply #20 on: May 19, 2015, 09:44:34 AM »
Cathy is most likely NOT a landlord.  The information I list is not invasive or overreaching.  It's what every major property management company in Arizona and California requires. 

The two are not contradictory.  You require giving sufficient information as to commit identity theft on a massive scale.  Do you similarly give your tenants your SSN and a copy of your driver's license so they can run a criminal background check on you to make sure that you won't commit identity theft?

babysteps

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Re: Would you rent to this tenant?
« Reply #21 on: May 19, 2015, 10:33:46 AM »
Landlord reference and high credit score sound very good.  Is there some specific reason you doubt the info you have?  If not, I would rent to him.  If your spidey sense is saying something is off, a few ideas:

Do you have another prospect, with no concerning tingling worries?  Could go with them.  What works for you & what you are comfortable with is more important than all us anonymous internet posters!

Do you live in the area?  If so, ask around to other folks and find someone who knows him and get a second or third reference (if the town is small enough for this to work).  If need be, you can ask the prospective tenant for a second reference, but ideally you check him out without him being the source.  You could ask for the name of his accountant and get a non-specific reference (he doesn't give you details, but vouches - or not - for the prospective tenant).

Also, you could check out the business - never hurts to check if it exists, if there are online reviews, whether they are active in the community, if their building is structurally sound, etc. etc.  Google the prospective tenant, if you haven't already.

If your spidey sense is still tingling, call up likely customers or suppliers and see if they can give a reference...or, look for another tenant :)

Aside - if he is the president of a family business, he may or may not get regular checks, and if he is an owner they may be 'owner draws' and not paychecks (agree with some prior posters, there may not be a W2 to see).  His and the company's financials may be intertwined (depending on size of business) - which could make him reluctant to share tax returns.  Doesn't mean you have to rent to him, just that I can see why he doesn't have or doesn't want to share some of what you have asked.

Another Reader

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Re: Would you rent to this tenant?
« Reply #22 on: May 19, 2015, 11:27:04 AM »
It's essentially the same information a lender would require.  Instead of renting you money, I'm renting you a hard asset that I need to protect.  A lender and I are both interested in your ability and willingness to return the asset(s) unaltered at the conclusion of the rental period.

In Arizona, there are very strict rules for licensed property managers to follow in protecting tenant information.  Files must be kept in locked cabinets and provisions must be made for securing the room in which the files are located. 

If you don't want to comply, find another landlord.  However, you should be aware that landlords willing to accept higher risks usually have higher rents or are difficult to do business with for other reasons.

beltim

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Re: Would you rent to this tenant?
« Reply #23 on: May 19, 2015, 12:16:35 PM »
It's essentially the same information a lender would require.  Instead of renting you money, I'm renting you a hard asset that I need to protect.  A lender and I are both interested in your ability and willingness to return the asset(s) unaltered at the conclusion of the rental period.

I agree, except for the copy of the driver's license.  I was just pointing out that the amount of information required, even though standard, is quite invasive.

In any case, the OP already has the credit report.  The OP knows the credit score - 800.  The OP knows the tenant has sufficient income to pay, as judged by the tenant renting in the same complex, paying early, and getting a great reference from current landlord.  In addition, there are substantial liquid assets available to the tenant as proved to the OP.  There isn't an income statement, but there is a good, verified reason for that.

I don't understand how this isn't a slam dunk.  If you're not willing to rent to someone with perfect credit, great references, sufficient income, and enough liquid assets to pay for probably decades of rent... then who the heck do you rent to?

Another Reader

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Re: Would you rent to this tenant?
« Reply #24 on: May 19, 2015, 12:39:25 PM »
If the OP pulled the credit and criminal and did not accept reports supplied by the applicant, I would be more comfortable.  I would want some verification of income and/or assets before I would accept this tenant.  There are fairly elaborate identity scams out there, and I don't want to find that a high level drug dealer is living in my house after he moves in.

Elderwood17

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Re: Would you rent to this tenant?
« Reply #25 on: May 19, 2015, 01:14:06 PM »
I would rent to him!

kathrynd

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Re: Would you rent to this tenant?
« Reply #26 on: May 19, 2015, 01:49:42 PM »
Cathy is most likely NOT a landlord.  The information I list is not invasive or overreaching.  It's what every major property management company in Arizona and California requires. 

Wealthy does not necessarily make a better tenant.  I recall several stories of high-end townhomes and houses in the Oakland hills being trashed by celebrity sports star tenants in the 80's and 90's.

We are Canadian Landlords.
In our experience, tenants who are self employed or work for a family business, we have the most problems collecting from, if the situations turns bad.


zoltani

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Re: Would you rent to this tenant?
« Reply #27 on: May 19, 2015, 03:24:18 PM »
Am I the only one here that doesn't place too much weight on credit scores? Often people are renting because they have bad credit and cannot get a loan. This doesn't necessarily mean they won't pay their rent. Of course, really bad credit with collections is a different story. 

brooklynguy

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Re: Would you rent to this tenant?
« Reply #28 on: May 20, 2015, 01:23:14 PM »
To hammer home the information security/privacy concerns discussed above, is it possible that the OP already revealed too much information about this prospective tenant?  By no means am I suggesting that the OP has done anything wrong, but I just want to highlight how real these concerns are in today's day and age.  Anyone who is able to discern the OP's identity (such as the forum administrators, or hackers, or anyone else, if the OP subsequently reveals additional information about him/herself that would allow anyone to easily identify him/her) could then easily identify the OP's property through public records, and in turn identify the renter of the property, and (thanks to the original post) know the renter's credit score, value of retirement funds, and income level.  Again, I don't mean to pick on the OP or suggest that it was wrong to start this thread (and I might very well have done the same in the OP's shoes, since I'm only thinking about these issues now in response to the discussion that was generated in this thread), but now that I'm focused on these issues, I certainly wouldn't want a prospective landlord to share any of my financial details (even on a no-names basis) in an anonymous-but-in-reality-maybe-not-so-anonymous internet forum.

tcspears

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Re: Would you rent to this tenant?
« Reply #29 on: May 20, 2015, 02:31:18 PM »
I don't think there is any non-public personal information in the OP's post; so I don't see any risk in information exposure.

If you have proof of funds, background check, verified employment, and a landlord recomendation, why bother with paystubs?  Most companies don't seem to provide paystubs anymore (at least in the North East), they might be availble on request, but it's a pain.  credit scores are becoming fairly archaic as well, as there are so many other data points out there that FICO doesn't take into consideration.

He sounds like an ideal tenant, but I would also wonder why is he renting and not buying...

stachestash

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Re: Would you rent to this tenant?
« Reply #30 on: May 20, 2015, 05:38:57 PM »
To hammer home the information security/privacy concerns discussed above, is it possible that the OP already revealed too much information about this prospective tenant?  By no means am I suggesting that the OP has done anything wrong, but I just want to highlight how real these concerns are in today's day and age.  Anyone who is able to discern the OP's identity (such as the forum administrators, or hackers, or anyone else, if the OP subsequently reveals additional information about him/herself that would allow anyone to easily identify him/her) could then easily identify the OP's property through public records, and in turn identify the renter of the property, and (thanks to the original post) know the renter's credit score, value of retirement funds, and income level.  Again, I don't mean to pick on the OP or suggest that it was wrong to start this thread (and I might very well have done the same in the OP's shoes, since I'm only thinking about these issues now in response to the discussion that was generated in this thread), but now that I'm focused on these issues, I certainly wouldn't want a prospective landlord to share any of my financial details (even on a no-names basis) in an anonymous-but-in-reality-maybe-not-so-anonymous internet forum.

I did try to keep privacy in mind with my post but you make some good points so I have made some modifications. 


squakbx

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Re: Would you rent to this tenant?
« Reply #31 on: May 20, 2015, 06:04:52 PM »
My thought is why does a president of a 90 year old company need to rent? 
My experience is current landlords will tell you any thing to get a bad tenant out.
Have you verified that his current location is being sold?
I have been a commercial landlord 36 years and a residential landlord for 22 years.  I have done work for several property managers and have heard theirs stories.
I agree with a previous post and go with your gut.

Rubic

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Re: Would you rent to this tenant?
« Reply #32 on: May 20, 2015, 06:26:54 PM »
He sounds like an ideal tenant, but I would also wonder why is he renting and not buying...

That would have described me for most of my life.  Before I purchased my current condo in the 2010 wreckage, I lived in an apartment for 12+ years, in some months paying less in rent than some of my friends' utility bills.

I was also an apartment tenant some years earlier when I rented out my house due to the economic disparity between owning and renting.

stachestash

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Re: Would you rent to this tenant?
« Reply #33 on: May 20, 2015, 06:31:41 PM »
My thought is why does a president of a 90 year old company need to rent? 
My experience is current landlords will tell you any thing to get a bad tenant out.
Have you verified that his current location is being sold?
I have been a commercial landlord 36 years and a residential landlord for 22 years.  I have done work for several property managers and have heard theirs stories.
I agree with a previous post and go with your gut.

Good points.  I will certainly keep that in mind with future tenants.  As for this one, I verified that the current condo is indeed in contract, spoke to the verified owner and seen the listing online.  Also, his reason for renting is also very acceptable to me since he's in a transitional period in his life.  He likely won't be living here for more than a few years.  My gut says, he'll be a good tenant and with all the help on this board, I feel very good about renting to him.  Thanks again for everyone's input.  You guys rock!

Letj

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Re: Would you rent to this tenant?
« Reply #34 on: May 20, 2015, 06:33:38 PM »
I'm fairly new at landlording and not sure how to qualify this applicant to rent my condo.  Here is the info:

Verified President of a 90 year-old family business (where he has worked for decades)
Credit score = Excellent
Proof of funds = Copy of non-retirement brokerage with sizable assets.
Income = claims 110x monthly rent but does not want to verify with tax returns (So I should basically ignore this.)
Reference = current landlord (also in my condo) says he pays rent one week early and takes very good care of apt. (moving only because current landlord is selling unit).
Impression = Met in person and he seems respectful, responsible and personable.

Can anyone chime in whether or not the proof of funds and good reference from another owner in my condo offsets the unverified income.  It feels like this should be okay. Would you rent to him?

What this issue. This is a good as they come.  Why do you need to see his tax return. I personally would never give my tax return to a landlord under no circumstances. This is very intrusive and my tax return is very private.

Letj

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Re: Would you rent to this tenant?
« Reply #35 on: May 20, 2015, 06:37:55 PM »
BS he does not get pay stubs.  How is he paid?  Did you run his credit and criminal background check, or did he provide you the information?  Did you get a copy of the driver's license and verify the SSN?  We run everything and do not accept tenant-provided reports. 

I'm in the minority here, but I would NOT rent to him without more independently verified information.
\

BS. That's not that unusual. He probably does not receive a paystub because he is not an employee; he is an owner and probably does owner's draw. The credit score is the single most important factor because people with high credit score would rather starve than get it ruined plus he has good assets. What's the issue?

Another Reader

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Re: Would you rent to this tenant?
« Reply #36 on: May 20, 2015, 06:47:16 PM »
I explained my misgivings. 

He should provide some proof of income.  We require that proof or we do not accept the applicant.  Good credit scores and a reliable, steady and verifiable source of income generally correlate to good tenants.  I have tenants getting two Social Security checks - so the income does not have be wages or salary.  Just prove the income.

In this case, the landlord has done a fair amount of due diligence and is comfortable renting to this tenant.  I hope the OP reports back in six months and tells us things are going well.

monarda

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Re: Would you rent to this tenant?
« Reply #37 on: May 20, 2015, 09:38:27 PM »
We had a tenant we rented to with an "A" credit score.
She was fine at first. But in the end she was someone that caused a lot of aggravation.
We were happy to see her go.  Don't rent by credit score alone.

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Re: Would you rent to this tenant?
« Reply #38 on: May 20, 2015, 11:20:20 PM »
Snap this guy up before someone else does. Even if he's a pain in the tush, he'll pay the rent on time and cover the cost of any damage to the property, in order to avoid damaging that credit score.