LLs: What's your typical requirements in renting out units? (renter, deposit, credit report)

[lepoisson]

Originally Posted by COCUE

Hmm no, that's totally incorrect. Depends on where you live. High credit score didn't mean you can automatically afford to buy desired house or even want to buy a house at the current time.. plenty of reasons why people rent, just means that you manage your credit well and pay your bills appropriately. I've been a renter several times. I can only remember having 2 kind of credit scores - zero credit because I am an immigrant that came to US for college so non existent credit and av free years later had 750+ credit to 800+ that I have now. My first stint as a tenant was for my first jobout of school and I rented for a year for ~$2,000/month (score ~750) to get to know the city and bought a loft a year later. Next time as a renter, when we moved to the bay area and wasnt going to buy a $1M+ home without being very sure so we rented a house for $4,500/month. DH and I both had credit of ~800 each around the time.

I know so many people on that situation with great credit who decide to rent for many reasons including a desire to not own a property and be able to pack up and move as needed. Always different strokes and all that

Yeah, I guess it all depends on location. But here in Texas, if you are expecting renters to have credit scores of 800... good luck having any tenants.

I've got a small car loan, a few credit cards (which never carry a balance), and paid off student loans on my credit. My score is only in the low 700s.

[Hollywood]

I like to see credit in the 700s, but if it's close and everything else checks out, it's no problem. Just make sure they're not past due on anything, haven't missed payments, and no judgements/collections.

For reference, I'm in the mortgage industry, and there's no difference in an applicant having a 740 score, and an 800+ score. They get the same rate. Below 740, they either have to settle for higher rates or paying points.

[karen_in_nh_2012]

Just wanted to publicly apologize to jw2 for my cynical, sarcastic, and rude "hmmm..." in my earlier post (#20 in this thread). As I wrote back to him, sometimes I am too cynical for my own good. OF COURSE markets vary tremendously around the country, and his area sounds VERY different from most so his criteria make sense for that area.

Anyway, OP, are you going to continue to use the criteria you listed in the first post of this thread? A credit score of 600 sounds kind of low to me, although your other criteria are reasonable. I personally DO allow pets, though, and it's been 99% positive (for them and for me). (But did you see the long thread about "emotional service animals"? Be prepared to have some applicants use that label in the future to try to make you rent to them!)

I am also allowed to charge first, last, and security deposit in advance -- the rule in my state (lovely little New Hampshire) is that LLs can only charge first and security deposit, UNLESS they have only 1 rental property (as I do). I think they made the rule specifically for people who are now renting out the house they used to live in.

[griffon652]

Originally Posted by CCUGal

A recent post has made me ponder this question (most will know which one). I've turned away a few applicants based on them not meeting my criteria, but I would like to know what most LLs use as I'm still learning (only 27 here).

Here's what my requirements are:

- Credit score must be above 600 (does anyone rent to those below 600? I tried it once and never again)
- No prior evictions
- No criminal history
- No pets
- No smoking
- First month's security deposit equal to that in rent
- Must be able to show steady employment (would I ask for paystubs or can I call their work?)

As far as income, I've been seeing that most ask for it to be 3x higher than rent. Is that the norm? Also, how would you verify that? And if I'm missing anything, please mention it and how I can verify that info.

TIA!

I'm fairly identical to you in terms of requirements. A few differences are:

-Credit score of 650+
-First, last and security when moving in
-Landlord information for the last 2 years

Originally Posted by jw2

I put more value on the credit score than most. I used to require 800 but will now accept 780. I still prefer 800. Of course this shows someone that pays their bills but perhaps the bigger reason is I want my tenants to want a pristine record because they will do whatever they can to maintain that.

Like Karen I was surprised by your requirement and even more surprised that you can consistently find quality tenants with high scores wanting to rent. 760+ usually means exceptional money management skills. And finding someone with 800+ credit is very hard. I should know because I have all the requirements needed to have a high credit score and I still couldn't get to 800 for 15 years!

I have had credit for 16 years, no late payments ever on anything, had 10+ CC with no revolving balance (now I have 14), paid of car notes, paid off mortgage, extremely low credit limit to debt limit ratio and the only debt I have had for the past 7 years is my mortgage. Yet even with all that my credit score was always around 750-770. This is the first year that my credit score is above 800. And even then its with only one agency. The rest still have me somewhere between 780-800.

[karen_in_nh_2012]

Originally Posted by griffon652

[to jw2] Like Karen I was surprised by your requirement and even more surprised that you can consistently find quality tenants with high scores wanting to rent. 760+ usually means exceptional money management skills. And finding someone with 800+ credit is very hard. I should know because I have all the requirements needed to have a high credit score and I still couldn't get to 800 for 15 years!

I have had credit for 16 years, no late payments ever on anything, had 10+ CC with no revolving balance (now I have 14), paid of car notes, paid off mortgage, extremely low credit limit to debt limit ratio and the only debt I have had for the past 7 years is my mortgage. Yet even with all that my credit score was always around 750-770. This is the first year that my credit score is above 800. And even then its with only one agency. The rest still have me somewhere between 780-800.

jw2's situation is pretty unusual (coastal properties, high-income area), hence his being able to get applicants even with his very high requirements! (See my apology in post #23 -- he can tell us more if he wants, I don't want to speak for him!) I feel bad that my cynicism made you question him as well (although you were more polite!). I have resolved to give posters the benefit of the doubt.

Your credit situation sounds very similar to mine except my history is 30+ years now! Finally went above 800. Sometimes I really wonder how they do their "credit math," as my jump was from 768 to 800+, which seems like a large jump when I had no major changes.

I have sometimes thought about getting a second rental property, but in New Hampshire at least, that would change the rules for me and I wouldn't be allowed to charge first AND last AND security -- just first and security. I'll take the "security" of the extra deposits above a second property -- at least for now!

[CCUGal]

What's the best and easiest way to learn the laws of being a landlord in the state you live? After reading different threads on this forum, I can't believe how the laws differ from state to state.

[oregonwoodsmoke]

Originally Posted by lepoisson

If someone has a credit score of 760 or above, they probably won't be renting in the first place. Crazy...

You'd be surprised. All of my current tenants have scores over 800. One of them has an income over $250,000 and is renting a place with low rent (for the area) as he saves up and plans to pay cash for land to build his own house.

My son just had tenants with near 800 credit scores move out. Before that, it was a man with a score over 800 that had married a woman with a score below the floor level and pages of judgements. He was making her toe the line, though, and they were good tenants.

I don't have a credit score requirement. My written criteria calls for a credit report that gives the landlord assurance that the rent will be paid. I've rented to people with no score at all. They paid cash for everything and hadn't ever missed a payment, so they never did anything to attract the attention of the credit bureaus. I've got no problem renting to a tenant who doesn't owe a single penny to anyone and who has never made a late payment. I don't care if he doesn't have credit score.

[prospectheightsresident]

Be careful with the "no criminal record" requirement as it may be discriminatory/illegal under federal law. See: Denying Housing Over Criminal Record May Be Discrimination, Feds Say : The Two-Way : NPR Additionally, some states and municipalities may have limited how landlords can use criminal records to deny renting to people.

[Upset tenant 9511]

Some of you landlords sound pretty insane with your credit score requirements. Especially the one requiring an 800. You have to be nuts on that one or flat out lying. You realize that less then 1% of people over 18 have a score above 800 right? Virtually no one under 40 ever will be Over that as requirements needed to get a score that high have a lot to due with age of credit accounts. One would think that actually looking at the report would have FAR greater value then the score itself. In this area it's much cheaper to buy then rent so virtually everyone that can buy does. I'm probably one of the few that doesn't, mainly because the market scares me to death, I lost about 50k on my first house 20 years or so ago and it still sticks in my craw. I'm around 40, have good to great credit, enough money to buy the place I'm living in with cash and I don't have an 800 score. Mainly because I don't use enough credit to have an absolute top notch score.

I doubt anyone around here has any score requirements at all although they all run credit reports. I'd assume that they do to look for a previous landlord suing you or something along those lines. If they ruled out everyone that could buy a house there'd be a ton of empty rental properties. That might be different in other areas but literally we looked at a condo to rent for 1385.00 a month that I could have bought for a total payment of 820.00 a month including taxes and insurance and everything.

I don't get why anyone would use a credit score to qualify anyone for anything anyways. The info on the report is far more valuable then the score. It's a game. If you play it by the credit agencies rules then you'll have a good score. If you don't you won't. Like I said I could buy both sides of the double I now rent for cash if it was on the market and I wanted to. One of my sisters has a higher credit score then I do but I don't think she could even afford to pay the rent on one side of it. However she plays the "credit score game" and I don't. Does that make her more qualified to live here then me? Hardly. So go ahead and base your rentals on credit scores but dont look at me when it all goes sideways on you with someone that balances it perfectly but lives check to check, then has a life event come up.

[Upset tenant 9511]

Oh the other thing I forgot to mention RE the 800 credit score.... Due to the weight the credit agencies put onto home ownership there is zero chance someone will have a score of that or higher without a house payment. Good luck renting to no one!