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Would like 1 month to be security deposit, and the remainder 3 months to remain in some sort of "escrow" that can be tapped into if tenant ever is late or stops paying rent for any reason. Because it normally can take 2-3 months to evict. I don't know if this means all of this has to be considered "security deposit".
Or maybe you gave me an idea, it can be setup to be initial portion of lease renewal, or tail end of current lease.
Hoping others can share experiences.
I don't have any answers for you (I fall into the "maybe they don't know" category twingles mentioned above). I was just wondering what the applicant proposed the 4 months up front actually be used for and if you and the applicant were on the same page. It's certainly to your advantage to have the 4 months up front to all serve as security deposit/escrow for the reason you mention, at least for the initial term of the lease (12 months or whatever). That way it's always there in case there is an issue with non-payment.
We are renting out our townhouse. There is an applicant that saw the unit this past weekend and is very interested as it is ideal situation.
Applicant is in process of filling out application so we can run credit check, but already informed us of poor credit and past bankruptcy all accredited to divorce several years ago. Applicant can show substantial income, and past bank statements, to show more funds flowing in than flowing out. Applicant even offered to pay 4 months rent upfront.
If we still decide to proceed, what is the best terms we can set?
Ideally we would like to set the 4 months upfront rent aside in some sort of "escrow" so if tenant stops paying rent and we need to evict, then we can tap into this escrow.
Is that legally possible? I don't think we can declare this as deposit since NC may have limit to deposit amount.
Also, how is someone with good credit any less risk? They can decide at anytime to stop paying rent as well and force us to go through eviction process.
The difference between someone who has been evicted and someone who has not is simply that.... the person who has been evicted before has shown you that they, at some point, could not or would not pay their rent and didn't ensure that they met their obligations to a prior landlord.
Someone who has had their home foreclosed on has demonstrated that they could not either pay their mortgage or sell their dwelling to keep from defaulting on their obligation to the bank.
Does this mean all those people are "bad" people? Nope.
Does this mean that all people with credit dings should not be rented to? Nope.
But, I'd tread VERY carefully with people who had a prior eviction or a foreclosure. I know it happens even to the most well-intended people sometimes, but keeping a roof over one's head is (for most people) a higher priority than anything but food and water, so I am leery when people have let a place to live go in such a dramatic way that they let it affect their credit.
I would not be super worried if someone had been late on some credit cards, if they'd been on time for a long period and seem to be back on track. In fact, if someone had been late on credit cards and never had an eviction or foreclosure, and were back on track for the past couple of years, I'd really assume that was a bump in the road, but I'd think that this meant that they managed to keep major obligations (shelter, transport, etc) current while they tried to get back on their feet.
I'd turn down a person with bad credit if I had any reasonable expectation of finding a person with good credit to rent my property, though.
And, if you do go forward with this and this person is making so much they are offering you 4 months, I'd want it as a security deposit. Straight up.
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I would not be super worried if someone had been late on some credit cards, if they'd been on time for a long period and seem to be back on track. In fact, if someone had been late on credit cards and never had an eviction or foreclosure, and were back on track for the past couple of years, I'd really assume that was a bump in the road, but I'd think that this meant that they managed to keep major obligations (shelter, transport, etc) current while they tried to get back on their feet.
Where did they say anything about an eviction or foreclosure? Has the applicant been paying a mortgage where he currently lives (not unheard of in a chapter 13.?) Or Renting. If he's been paying a mortgage, you can see that on the Credit Report. If he's been renting, you can talk to his landlord, making sure he is actually the landlord and not his cousin.
Quote:
Originally Posted by RedZin
And, if you do go forward with this and this person is making so much they are offering you 4 months, I'd want it as a security deposit. Straight up.
That's against state rental law. 2 months is the max.
I would talk to previous landlords, or otherwise his bank if he had stayed in the home through the BK.
I would collect first, last and security deposit and you should be covered if his references check out and he hasn't had issues since the BK.
Where did they say anything about an eviction or foreclosure? Has the applicant been paying a mortgage where he currently lives (not unheard of in a chapter 13.?) Or Renting. If he's been paying a mortgage, you can see that on the Credit Report. If he's been renting, you can talk to his landlord, making sure he is actually the landlord and not his cousin.
That's against state rental law. 2 months is the max.
I would talk to previous landlords, or otherwise his bank if he had stayed in the home through the BK.
I would collect first, last and security deposit and you should be covered if his references check out and he hasn't had issues since the BK.
Interesting. I didn't know that there were rules about how much security you can collect.
I'm not a professional landlord. Just stating my personal preferences as someone who has rented out a family home in the past and got screwed over by a crappy tenant with lousy credit.
I think I'd just look for someone who had decent landlord references that were legitimate and didn't have terrible credit.
But, hey... that's me.
Btw? I was discussing this in an academic sense. I had no clue based on this scenario re: evictions or foreclosures. OP didn't say.
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Interesting. I didn't know that there were rules about how much security you can collect.
I'm not a professional landlord. Just stating my personal preferences as someone who has rented out a family home in the past and got screwed over by a crappy tenant with lousy credit.
I think I'd just look for someone who had decent landlord references that were legitimate and didn't have terrible credit.
But, hey... that's me.
Btw? I was discussing this in an academic sense. I had no clue based on this scenario re: evictions or foreclosures. OP didn't say.
I agree with you that that better credit is better. But LL references are almost more important. Bad credit from a medical debt/divorce is not the same as bad credit from a judgement after an eviction or a judgement for wrecking a place.
In any case, OP can collect 2 months as a deposit and two for first and last months rent.
I agree with you that that better credit is better. But LL references are almost more important. Bad credit from a medical debt/divorce is not the same as bad credit from a judgement after an eviction or a judgement for wrecking a place.
In any case, OP can collect 2 months as a deposit and two for first and last months rent.
Yeah... I would not be so worried about medical collections or some temporarily slow credit cards. Or, even a BK if it was discharged and not too recent. But, landlords, mortgage companies, etc? I would be worried about those.
Ditto arrest records if there were convictions.
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He owns his own home, with monthly mortgage he is paying. He is in process of selling that house. He has never rented before so no LL references.
Collecting 2 months as a deposit and two for first and last months rent sounds like a swell idea. But I assume I have to apply/use the first and last month's rent, and can't hold that separately in some other "bucket".
He owns his own home, with monthly mortgage he is paying. He is in process of selling that house. He has never rented before so no LL references.
Collecting 2 months as a deposit and two for first and last months rent sounds like a swell idea. But I assume I have to apply/use the first and last month's rent, and can't hold that separately in some other "bucket".
Does his income seem adequate to cover the mortgage on his current home, plus your rent, plus utilities and other expenses?
Because house sales don't always go through as planned.
If I was renting a place and I owned a home, I might not be as quick on rent as on a mortgage that would further affect my credit.
If his income is steady and he can afford both places, I would not be so concerned, I don't think.
Not sure about rules for first and last, but I would think that paying that way means he's paying in arrears for the rest of the term of the lease. You'll want to check with a lawyer on that.
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He owns his own home, with monthly mortgage he is paying. He is in process of selling that house. He has never rented before so no LL references.
Collecting 2 months as a deposit and two for first and last months rent sounds like a swell idea. But I assume I have to apply/use the first and last month's rent, and can't hold that separately in some other "bucket".
These are the reasons why he is so earnest to you.
He KNOWS that you're an amateur who will give him the "fair shake"
that he'll never get from a pro mgmt co or any experienced LL.
If there's a problem with your property that forces YOU to consider all comers
then you do what you have to... and hope for the best.
But if you aren't forced by circumstance to do so.... don't.
These are the reasons why he is so earnest to you.
He KNOWS that you're an amateur who will give him the "fair shake"
that he'll never get from a pro mgmt co or any experienced LL.
If there's a problem with your property that forces YOU to consider all comers
then you do what you have to... and hope for the best.
But if you aren't forced by circumstance to do so.... don't.
I'd be especially leery if this person is willing to rent for more per month than others who have expressed interest in the property.
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