Question for Landlords

[onthemove]

What is your minimum rent standard? We can’t sell our condo so we need to rent it, we’ve never been landlords before. We have an applicant that is self employed in the construction business. The rental management company usually has a 3x minimum, he falls at about 2-2x. This is a fairly high-priced unit, so his left over income is still several thousand.

We are not desperate, but it is has been vacant for a month now. We only just opened it up to renters, but haven’t had many people look. A problem with Zillow has it only showing for sale and not for rent, which I don’t think is helping.

Would this be too much risk? I am having issues separating emotional and business. I feel bad that he should be able to afford it, but clearly don’t want issues in a few months if the economy tanks in a few months and the construction business is the first hit.

[formerlyak]

Not a landlord, but given that he is high income and the rental is high priced, and he would have thousands left over each month, I think I'd rent it. Around here, many good contractors are booked 2 years out these days, so it is likely that he has jobs lined up.

When I went through my divorce and my ex moved out, I no longer met the income requirements for my rental but I made a decent income. I explained that to my landlords and they said we'd give it a try. I lived there for two more years with no issues paying, and they always said what a great tenant I was because I took care of most things on my own (which I would guess someone in construction would as well). I wasn't the tenant who called for every light bulb, every drippy faucet, etc.

[mccallister84]

Could you request a slightly higher security deposit?

Personally I would be more concerned with his credit and his past history or paying or not paying rent (and how much that rent was in comparison to this rent). If he’s been paying a similar rent without a problem I wouldn’t assume this will be an issue.

[onthemove]

So he has been paying $x-1000, which is about 30% less than this would be. Landlord says he has never been late in 3 years.

He declared bankruptcy about 6 years ago which seems in line with maybe a divorce and switching to this new construction job.

Has 2 late payments on his credit history in the last 5 years but all up to date now.

This is why I don’t want to be a landlord, it’s not cut and dry!

[bullygirl979]

What is your gut sense from talking with him? DH is a landlord and is VERY, VERY picky about who he rents to. He was once out of town and his XW picked a tenant. He ended up having to evict the person. It took months and months and the woman trashed the place. You should absolutely take your emotions out of the decision.

[cuadrado]

I'm technically a landlord but we use a property management company. The requirement for income is 3x/rent and our company will not consider anything less than that. I have owned my property for the past 10 years and made exceptions on certain things from time to time. It has *always* come back to bite me in the ass and cost me extra money. I hope I don't sound like an @$$ here but I probably wouldn't rent to him, especially if it just became available for rent and isn't on Zillow yet.

[onthemove]

We haven’t talked to him, just seen the application from the management company

[scout8]

Aug 19, 2019 10:52:55 GMT -5 onthemove said:

So he has been paying $x-1000, which is about 30% less than this would be. Landlord says he has never been late in 3 years.

He declared bankruptcy about 6 years ago which seems in line with maybe a divorce and switching to this new construction job.

Has 2 late payments on his credit history in the last 5 years but all up to date now.

This is why I don’t want to be a landlord, it’s not cut and dry!

I wouldn't have a problem with the income ratio so long as his credit is good and his current landlord says he paid on time. So, I would probably go ahead with him. My only concern is the bankruptcy. I'd try to find out a little more about how it happened. 

Another idea would be to ask about assets. When income is low compared to the rent, I will often look at assets too. If the applicant has quite a bit in savings to cover any shortfalls, then that usually makes me feel comfortable.

[mccallister84]

With all the information you have provided I would probably keep looking for a tenant.

[jwright]

I'm guessing a co-signor is not an option?

[bullygirl979]

Ehhhh...if you haven't met him, and he can't get a co-signor, I think I would keep looking.

[flygirl]

I’d keep looking unless he wants to pay a higher security deposit 

[SusanBAnthony]

You don't sound like you actually want to be a landlord.

Does it really make sense to rent it out, or are you just delaying taking a hit on the sale?

I'd need to know the full picture to decide but I'd lean no.