<p>The house we have in the Bay Area commends a rent of over $4,000, so we have to be very careful on selecting tenants. Right now it is on the market.</p>
<p>Potential renter 1</p>
<p>pros: Was told they are good credit rating and good tenant, of course I have to do my due diligence. No pets, moving from the same town, looking for a bigger house with a big yard which we have.
cons: Wife wants to run an after school care, will have 4-5 kids. Licensed, permitted by the town.</p>
<p>Potential renter 2</p>
<p>pros: Husband work as a doctor has own clinic, wife is a nurse at the nearby hospital.
cons: bad credit rating due to employee theft of 100K and a mistake on buying a 1.8 million condo that is worth only 1.2 now, the condo is on the block, short sale. used to own multi-million dollar house.</p>
<p>Do you know what, if any, insurance implications there would be for that after school care?</p>
<p>I work in surplus lines insurance, which is a lot different from the standard market and I have little knowledge about the standard market, but I know that would be a big red flag for us so that makes me wonder.</p>
<p>Neither of these renters would be suitable, in my opinion. Do you really WANT some one running a day care business out of your rental home? Do you really want someone with bad credit? I would keep advertising or spreading the word. There has to be someone better out there.</p>
<p>You definitely don’t want the renter with bad credit. A person in financial trouble hasn’t learned anything if he is still trying to rent in the $4000/month category.</p>
<p>As far as the day care–you don’t want the wear and tear on your house, and you also don’t want the potential liability–what if a child falls down the stairs, etc.?</p>
<p>After having two years of horrible rental tenants in a home we can’t sell , we finally have great tenants. The two bad ones were local families , both had more excuses than money to pay the rent. This time , we rented to a group of blue color young men…several sources of income instead of one has worked wonders for us. I know it sounds like a nightmare , but this is the second time we have had a group and both times have proven to be excellent. They take care of the house, pay the rent on time and do not disturb the neighbors with parties or anything else.
This isn’t for everyone I realize , but it sure beats having people who are trying to rebuild their bad credit and still living above their means.
Don’t be fooled by their apparent secure jobs…go for option three</p>
<p>I am concerned with credit ratings. The previous old couple I rented the house to had a so so credit rating 660-680 range. lo and behold, they paid the first year rent without a problem but after we renewed our lease, the checks start bouncing. Just like some one commented before.</p>
<p>Hmm, I think I’d look at that credit report carefully. Maybe not so concerned with the number, but what issues they had. For example, we rented to someone who had a mediocre credit score, but it was because of some medical expenses unpaid. The rest of it was good, so we gave him a break. Get our check right on time every month.</p>
<p>There are a lot of low credit score renters out there。 Most of them are because the recent down turns of the housing value and they went under the water on the mortgages. Its hard to judge a person just because of the credit score. Because some of them choose not to pay their mortgage, some of them really had a problem in paying as a result of not making enough to pay. You have to take it case by case.</p>
<p>In the case potential renter 1 above. My take is that the guy had some loses from business because employee fraud in the tune of $79,000. This case is confirmed by arrest records and was published in the news paper. Even though, I have to think if a person who was qualified a loan of 1.8 million should be able to stave off a loss of $79,000. He choose not to pay the mortgage and resulting a short sale. I will really think twice if I should let him into my house.</p>
<p>If you decide on Renter 1, I would do the following:
Double (or triple) the security deposit required, to take care of any damage caused by the day care.
Make sure that you are an additional named insured on the commercial day care policy that the wife will be required to carry. Ensure that you will get notice before any changes are made (including cancellation or non-renewal) to the policy. And make sure that it covers damages from any alleged or potential defects in the property.</p>
<p>Absolutely hold out for option three. As others have pointed out as much as I respect small businesses of any kind, I don’t want one run out of my rental home that involves wear and tear. You certainly can find great renters that have less then sterling credit scores. Renter option 2 should be looking for a less expensive option to get back on his feet on the heels of walking away from a mortgage obligation. If that was 2-3 years in the past and he had great rental history since I might consider it, but you have nothing to go on but his immediate history which is walking away. It may have made the most financial sense, but you don’t want that to be your rent check not being paid.</p>
<p>Thanks for the advises, I am taking in ALL and your wise help really cleared my head.</p>
<p>I really don’t want to rent an expensive house like that to a self employed person. I had my troubles from a previous renter. He was self employed, as I said in the note in the up tread. He had no problem to pay for the first year rent. But from the end of May, all sorts of problems happen, bounced checks, lies, lies, promises, promises, it was never ending. And I found out he had skip rents on the office he rented for his business as well, because I was the broker helped him to locate that office for him. As a result, I am moving his back rent in the tune of about $10,000 to collection agency today, after he vacated the premises.</p>
<p>Case in point, a self employed person may be doing good for a while but your rent stability is at the mercy of his success in business. OTOH, if a renter with long term stable employment history by large corporation, the chances he got fired is less than a small business person who can turn off the lights any time.</p>
<p>Most likely, I am holding out for potential renter 3.</p>
<p>How old is the house? Is there lead paint in it? You will be first on the list to be sued since you have the asset, if something happens. Your insurance could/probably would go up significantly, or they would cancel it, if there is a daycare there.</p>
<p>DW has placed doctors in a few rentals in the past, with mixed results. If this one is strategically defaulting on his mortgage, that is a huge red flag.</p>
<p>I agree with others, keep looking.</p>
<p>re: renting to a group of singles. We have had mixed results with this. We have found that it usually winds up being a shorter-term tenancy, as people’s lives move in different directions. And about half the time, keeping the place clean becomes an issue because some of the tenants don’t like to clean and the others get tired of taking up the slack, so nothing gets cleaned, and then the clean ones move out. </p>
<p>And here it is technically illegal to rent to 4 or more unrelated adults unless you are zoned for a rooming house. It is widely flouted of course, but it can become an issue.</p>
<p>I cannot think of any thing else other than strategically defaulting on the mortgage. If they can afford 4000+ rent, they should be able to afford the mortgage and stay in this deluxe condo. His credit score is below 500, with comments on massive defaults. I am sure not only he defaulted the loan but also did not pay his suppliers, salaries and some thing else.</p>
<p>CAN they really afford the rent? Red flag. Physicians don’t always make good money managers (I hate that aspect of life) and doing a good job professionally is not the same as having the rent money every month.</p>
<p>Daycare center- if they need that income to afford your house wouldn’t they be better off in a less expensive area? Or does mom want to take care of kids with her own? I would wonder that any family with young kids won’t leave the property as they found it, especially if they are renting they can always move on to a different house in better shape after they did the wear and tear on yours. </p>
<p>I kept saying a loud NO when the possibility of renting our house came up- fortunately a buyer came through before I wavered (at a low price, but we’re done with any obligations and the new owners will care for the place because it is their own).</p>
<p>Would for sure decline the first ones. Would NOT want someone running a daycare out of your rental property. Lots of potential liability issues, and are there any neighborhood covenants that would prevent such a business? My gut says run fron this choice.</p>
<p>As for the Dr., I also see red flags with their strategic shortsale. That said, it may be a wise financial move for them. If you give them a 1 year lease, you should ask for several months in advance. Can you ask for the entire year? I suspect, though, that if they could swing that they could afford to stay put. That said, if you take them, do NOT let their business be the name on the lease. I agree that there surely are better options out there. Think about the hassle you just went though with the squatters in that other property. Who needs that again?</p>
<p>*** OOh, just caught the part about their massive defaults. That is way too unnerving for my comfort level. You should check the state licensing board and see if he has had any lawsuits/sanctions against him as well.</p>