Have seen many posts asking about tenant selection. Here are my rules to share.
standard rule:
0) this is business, so treat it as business. Money talks.
1) ok credit history.
2) good rental hisotry
3) stable/verifiable income after debts is 3x of rent.
4) a couple with young kids is preferred.
here are the reasons:
0) do not get emotion involved in business. Or you will loss money.
1) bad credit indicates applicants are financially irresponsible. On the other hand, applicants with perfect credit and good income would buy house within few years.
2) rental hostory is more important than credit sometime. Anyone had bad rental history will do it again. I have not seen anyone did not repeat it.
3) Income after debts are important. Check income and also check debt payment. 3x rent indicates no problem to pay rent.
4) good business is stable and predictable. For rental, a couple with young kids is a very stable family for years comparing to singles, or live with parents/roommates. with exact 3x rent and young kids, the family has less chance to save and buy house. And with young kids, the family would intent to stay in same school for many years. Therefore, this type of tenants has good chance to be good long term tenants.
Of course, there is time to relax the rule.
When the proeprty is on the market for weeks and no other alternatives, I would consider someone with questionable credit/rental history or drop the income to 2.5x of rent. To do so, we need to reduce the risk and minimize the loss in case bad thing happens. A common way is to increase the deposit to 2x or 3x rent. Some states do not allow that. You might be able to ask for last month rent upfront. the key is to collect more money upfront so that you have enough reserve to deal with eviction and vacancy.
standard rule:
0) this is business, so treat it as business. Money talks.
1) ok credit history.
2) good rental hisotry
3) stable/verifiable income after debts is 3x of rent.
4) a couple with young kids is preferred.
here are the reasons:
0) do not get emotion involved in business. Or you will loss money.
1) bad credit indicates applicants are financially irresponsible. On the other hand, applicants with perfect credit and good income would buy house within few years.
2) rental hostory is more important than credit sometime. Anyone had bad rental history will do it again. I have not seen anyone did not repeat it.
3) Income after debts are important. Check income and also check debt payment. 3x rent indicates no problem to pay rent.
4) good business is stable and predictable. For rental, a couple with young kids is a very stable family for years comparing to singles, or live with parents/roommates. with exact 3x rent and young kids, the family has less chance to save and buy house. And with young kids, the family would intent to stay in same school for many years. Therefore, this type of tenants has good chance to be good long term tenants.
Of course, there is time to relax the rule.
When the proeprty is on the market for weeks and no other alternatives, I would consider someone with questionable credit/rental history or drop the income to 2.5x of rent. To do so, we need to reduce the risk and minimize the loss in case bad thing happens. A common way is to increase the deposit to 2x or 3x rent. Some states do not allow that. You might be able to ask for last month rent upfront. the key is to collect more money upfront so that you have enough reserve to deal with eviction and vacancy.
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