What Your Landlord Thinks Of You
Posted on February 27, 2008 by Melissa
Filed Under Housing, Rental Property
Well, maybe it’s more of what your landlord thinks of your rental application.
Evaluating applications from renters wanting to lease our old home has given us an interesting look into what landlords value in a tenant. I assumed the optimal tenant would have a good credit score and payment history. I learned that isn’t necessarily true.
I’m going to be blunt and it may seem like what I say is cold.
Keep in mind that I don’t necessarily agree with these criteria and not all landlords use the same guidelines, either. These are not hard and fast rules; just observations I’ve made from my personal experiences so far.
Bad credit can be better.
Low credit means there’s a higher chance that you’re staying put. It’s common for tenants with high scores to lease for a short period of time then leave to buy their own place. They tend to be short-term renters. However, people with low credit scores may have barriers preventing them from buying their own home; perhaps their debt load is too high or they can’t secure a loan. That means it’s possible that they could become a long-term tenant.
The one thing a landlord hates to have is an empty property. Every time a renter moves out he has to start the process of advertising and screening new tenants, which could lead to a month (or longer) of having a property unoccupied. The ideal situation is getting a reliable long-term renter; one who isn’t going to go buy his own place in a year. We were told that large tax liens on a credit report could be a good thing because the applicant won’t qualify to buy a home. Awful, I know, but it’s true.
Late payments are ok, just not on rent.
Our manager says, “people will be late on just about every bill except for one that ensures a roof over their heads.” He has seen it all as far as terrible payment histories, and shrugs it off. He isn’t phased by a credit report full of lates on credit cards, loans, or utilities but he doesn’t want to see late rent payments.
Eric and I were concerned about one app in particular because he had a handful of bills (including child support) that went to collections just last month. Our manager said that he had an excellent history of paying his rent on time and that is what should matter most when evaluating him. It was hard for us to think in those terms, but I understand what he meant. I tend to wonder that if the other bills aren’t getting paid when will the rent be next?
Employment isn’t enough; it needs to be verifiable.
Long-term employment is a great thing in the eyes of a landlord. It’s even better when there are multiple income streams in the household; that means if one person loses their job there is still income coming in. However, if the employment isn’t verifiable in some way, it doesn’t really count.
One application we received had three incomes, all of them claiming they earned $2000 gross a month. Two of them were verified through credit reports and check stubs. The other applicant said he just started working for his father (whom he lived with) and couldn’t provide a check stub. He had no credit history (so no credit report) and no previous employers. We ended up not being able to consider his income because it couldn’t be verified.
He doesn’t care about your criminal history, up to a point.
The past is in the past, unless it’s serious or recent. With one application the resident had a criminal history starting as a juvenile. That would have been ok (all small charges) except that he had a conviction for every year after that, too. It didn’t just stay in his past, and some were repeat offenses. That isn’t a good sign that he is on the straight and narrow, if you get my drift.
Past rental problems are a big red flag.
One of the biggest factors when deciding on whether to approve an app is rental history. When they run your rental history they don’t want to see any evictions on your record. No landlord wants to deal with the hassle of an eviction and careful screening is one way to help avoid risky tenants. Past evictions could indicate a higher risk level and could pose a problem.
Big dogs mean big deposits.
We are total animal lovers and welcome pets in our old home, but when we got an app from some folks who had two 40 lb. puppies we asked for advice from our friend who manages 5 rental properties of his own. He advised us against it and said we should decide on a pet policy right away.
He said big young dogs have done the most damage to his properties in the past, requiring the replacement of doors, woodwork, flooring, fencing, and even the backyard landscaping and grass. He no longer allows dogs over 15 lbs. for that reason. He recommended that we increase the pet deposit to cover the cost of replacing the flooring. The couple didn’t make it through the screening for other reasons though, so we never got to that point.
I thought it might be interesting to share the new perspective we have now that we are landlords. I was shocked to find out that my assumptions were wrong on what things add up to be the best tenant. I also think large scale landlords may differ a little from single home landlords like us. We want someone who is stable and is going to take care of the property while multiple property owners may focus more on simply getting a long-term renter. I think experience plays a role, too.
Every application is different and depending on the situation, some of these factors may be ignored. In fact, we just approved an applicant today that doesn’t fit all of these criteria. I guess we are rebels! Hopefully it will pan out and our property will be occupied in a few weeks!
Image Source: Nick Douglas
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I’m not currently a landlord, but I still have to think that a tenant with good credit would be a better tenant. If my tenant is a 720 ( FICO score ), then I know, 100%, that I will get paid every month, on time. Sure, like you mentioned, I may have to find new tenants more often which is a hassle. But there will be no question about missed payments or late payments.
If my tenant is a 460, then all bets are off. Whether through difficulties in life, or simple carelessness, this person has a history of skipping bills, paying them late, or just throwing in the towel altogether on them. Even if their rent history is good, I would have severe reservations about letting this person live in my rental home. The last thing I want to do is chase down my rent payment every month so I can make the mortgage payment.
i want a good credit tenant…even if a poor credit tenant always pays his rent..he might skip the water bills or heating bill…this could make for major damage problem with your rental..like if pipes freeze and burst etc…and also, if you got to get rid of a (evict) non-paying tenant, you may never get paid what is due.
Very good post! I do have some thoughts, though.
On Bad Credit: The key here is that the credit report not show ANY late payments or deficiencies within the past few years. If someone screwed up years ago and has gotten their act together that’s fine, but renting to someone with any current issues can be a DISASTER
On Late Payments: I can see the argument, but it doesn’t fly. LATE PAYMENTS ARE NEVER ACCEPTABLE! I tried your manager’s theory and gave a few people chances but they ALL ended up in eviction.
On Past Rental Problems: If someone has EVER been evicted, you’re looking at trouble. Period!
On Big Dogs: They can be GREAT for additional income. With a deposit and monthly dog rent, you can score big time. That, and big dogs generally (not always) cause less damage then the little ones.
Thanks for sharing this with everyone! Maybe you’d be interested in contributing some money advice on our blog from time to time?
I was a landlord of multiple rental properties for 25 years - and know many other landlords. What always amazed me was the ones that actually never really followed up on the rental application - then wondered why they had problems. Making the calls to verify are SO IMPORTANT… never take a person at their word. Verify - Verify - Verify!
With pets - we had more problems with cats. The repairs from dogs were much less costly than from the cats. They ruined more carpets, floor trim, etc. I usually tried to stay away from renting to people with pets - much less hassle!
Good Luck!!!
I seem to be a good tenant. I’m a working professional with a history of long term leases & excellent long term (with the one company) job history. I applied for 4 places recently & was offered all 4 within the day.
That said I can’t wait to get out of the rental scene. It’s a nightmare here in Sydney Australia, but at least we don’t have to provide our credit histories to prospective landlords!
I don’t think you sound cold. Your tips are very practical. My husband and I hope to keep our current home as a rental property someday, so I really appreciate learning these things NOW. Thanks for this post!
These are great comments!
I thought I’d say more about the bad credit part. I really want a tenant with good credit, like everyone else, but most of the time that isn’t what I’m going to get.
In my area (outside of the city), it is actually cheaper to buy than to rent. That usually means the people looking to rent either can’t buy a home for some reason (no down payment, bad credit, etc) or are needing to stay flexible (new to the area or wanting to move). Our manager says most have bad credit to blame and so far, that jives with our experiences.
When looking at these applications we have to focus on the factors that tell us the most about that person’s future rental history. That is why past rental history is weighed so heavily.
He feels that poor credit doesn’t necessarily mean that they will skip out on their rent. It increases the risk but in his experience, people will allow other bills to default before they risk losing their shelter. That is why he sees so many people with bad credit and flawless rental histories. If he sees even one late rent payment in their history, they are too risky.
I bet areas where it’s cheaper to rent than to buy will get tenants with better scores. Here, finding that high credit score applicant means snagging them before they buy a home of their own.
Interesting post on what you are looking ofr in your renter. The fact that poor credit and multiple collections has a lower impact is really interesting. What if the renter has good credit, good salary but has a collection from a previous landlord? Would you not rent to this person or would you want an explanation or verification from a more recent landlord?
[...] A Penny Closer faces some harsh decisions when deciding on rental applications. [...]
This is interesting, especially when you consider that many readers may end up having to rent houses if a job calls us away and we can’t sell the current place. It also explains a lot about the choices made by the absentee landlord who owns the house across the street, presently occupied by a Hell’s Angel. Guess we can expect to see that tenant for quite a while, if your experience about folks with lower credit rating is right.
[...] What Your Landlord Thinks Of You - I loved this post over at A Penny Closer that looks at how landlords might see a rental application, and why bad credit may actually help you get an apartment. Yes, really. Read the post to find out why! [...]