Looking for advice, especially from those of you who are landlords or who have faced a similar situation.
Scenario: Two young adults want to room together. One person has good credit for their age along with some decent assets and zero debt. Other person comes from a different background and has had some issues years back with bad credit as well as having quite a bit of student loan debt having financed their own college, therefore credit report isn’t great. Both are gainfully employed, can afford the rent, and have been responsible with bills in the past few years.
So, how do they make themselves more attractive to landlords, especially on places where there could be competition from other interested renters?
Some thoughts of my own below which are all doable. do these work or not?
A co-signer, liable for all the rent for the whole year, would be great. We had to do that several times, just because credit wasn’t established enough. It’s a bit of a nail biter with other parties involved, but sometimes you have to do it.
I think it depends on the market - is it a renters or a landlords market? And your definition of “not great” credit. Plus whether the other roommate can (on paper) afford the rent on his own.
When I did mortgages for first time or low income borrowers, we would always ask them to document poor credit and f it seemed like it was understandable and behind them (unanticipated medical expenses, a fire etc) we could consider it.
They could also give copies of recent on time payments for other bills that may not show up in credit checks - cell phone bills, even rent to their parents if they have check copies or electronic evidence.
Having a co-signer would not be an issue. I guess you mention that upfront?
I’d say the market is probably pretty balanced overall between renters and rentees (it’s not crazy hard to find rentals) but they are specific about what they want and certain neighborhoods so that puts them more into a landlords’ market as I’m sure the landlords for those units will have other interest.
As landlords, we only care about recent activity (last couple of years). We fully understand that we get tenants who have made mistakes in their past and are forgiving about that as long as we see change. If in doubt, a good faith offer of extra security deposit would show us their determination.
Of course we also care that their income can pay the rent comfortably, but we care about that with every tenant, not just those with past credit issues.
I don’t know how typical we are, but that’s our policy.
The last post contains a subtle, but important, point. There are landlords who are individuals managing their own property and there are landlords whose property is professionally managed, often by a large management group.
You will have better luck with the individual landlords than the large professional groups, since the professional management groups will have set policies and procedures. With the pro groups, if you don’t check the box or hit certain required levels, the answer is “no”.
From my point of view, a cosigner is much more attractive than a larger security deposit. If doschicos Jr. flakes on the rent a bigger security deposit helps me for one month, but having doschicos Sr. on the hook gets me paid for the whole lease term. Same issue with prepaid rent.
If one tenant is good enough on his/her own, then I don’t care as much that the second tenant is a poor risk.
A cosigner with funds is the Holy Grail. Anyone whose parent is willing to cosign the lease gets bumped to the top of the list. As was stated above, this is for a small landlord. A big rental company is more likely to care about the boxes being checked then having Warren Buffett as a cosigner.
If it’s in a big city…I’ve heard that sometimes that makes using a broker to find a place worth it. The brokers know which landlords will budge and which won’t, so you won’t waste time looking at places that won’t rent to you. They also can help a skittish landlord figure out which protections will work.
I was a landlord with a professional management company before I quit to move half way across the country last January.
We did all three things. A co signer was usually the first choice with a bigger deposit being the last choice. Pre paid rent was usually the 2nd choice, though sometimes a first choice if the person was older than college age.
We had lots of parents that did not want to be co-signers because we required that they be co-signers for the entire time the young adult child lived there, not just the first year. A lot of parents would rather help their kid prepay the rent for a year and then be off the hook.
We had one young man whose dad had basically disowned him. I have no clue why, he was very responsible and mature for a 20 year old. He refused to ask his parents to co-sign. He went and found 2 room mates. They each came up with 2 months rent and they prepaid for 6 months. They then paid their rent as usual so that at the end of the 6 month lease they had prepaid for the 2nd 6 months and then had the year taken care of.
There are a lot of ways to work around things if you have a land lord that is willing to work with you while following the rules.
I don’t agree with @dadof4kids about not caring about 2nd tenant if first can pay on their own. In many areas if one tenant moves out the others can stay. If the qualified tenant moves the landlord would be stuck with the poorly qualified tenant. If that tenant turns out to be a flake the eviction is costly.
In area where the landlord has a lot of choices they will usually go with tenants who are all qualified or require a co signer. In our business you would be co-signing for the entire rent not just your child’s portion. If an apartment is harder to rent we are more flexible.
If it was my kid I would have them go in to the viewing with credit reports, offer letter or pay stubs. Also have a generic application ready to hand over. As someone else mentioned Mom and Pop landlords will be more flexible and willing to assume the risk if they get a good feeling from the applicants.
We have with our kids who have good credit but not a lot of history offered to pay 6 months in advance or larger deposit in lieu of co signing. My H as a landlord and property manager will never co sign for our kids especially in a roommate situation.
Our S was renting his 1st place after college on the opposite coast to start his new job. He and we showed up at her 1st appointment of the day. S had a letter from new employer in hand, offering him a new job and I had a checkbook to write a security deposit and 1st month’s rent. The owner who showed us the place was impressed that we had all flown over to view place and cancelled the other appointments and let our S sign the lease with me writing a check. She didn’t do any credit checks. It worked for us.
I’m glad it worked, but honestly I can’t imagine not doing a credit check for future tenants. Some of them have their story down pretty well now - which is why they get new landlords every so often. They buy it and take the cash in hand offered.
We had one of those once. We learned. No matter how good the story is, it’s worth the few bucks to cross check it.
Another time we had one get hooked on drugs post a job accident. That one wasn’t pretty either, but I’m not sure how we could have foreseen it. Those have been the only two bad tenants in our history (knocking on wood).
I guess she believed us—S was graduating from good, had job acceptance in hand, listing salary and had us parents and kid in person show up for tour. Yes, she took a risk but S was an excellent, responsible tenant and it worked for him and LL. He had and still has perfect credit rating if they had wanted to check.
“We had one of those once. We learned. No matter how good the story is, it’s worth the few bucks to cross check it”.
Amen to that. People lie–especially people with money issues. Only trust what you can see and verify. Not a fan of co-signers–esp if they dont live in same area. I dont want to have to go after money from a 3rd party I might have to sue. Life’s too short. I’m a cash up front talks BS walks in my dealings. Big mgt companies have lawyers ready to go so it might work for them. I;d rather move on and find a new better tenant asap.