Landlord’s Guide To Renting To Someone With Bad Credit

A Rough Economic Situation

The economy is recovering, but it’s not an overnight process. Consider this list of apartments in McKinney in terms of price. As you can see, they’re a little higher than one might expect. Many landlords will have no choice but to accept tenants whose credit and resources aren’t what they could be.

Still, a tenant with bad credit isn’t necessarily a bad tenant. There are plenty of individuals who have gone through a divorce or something similar who pay their bills on time, regardless of their credit score, and do have a stable work situation.

But you can’t trust someone’s word in a world where lying is held in greater regard than truth. From film to books to music, modern society tends to glorify the sneaky fool who uses temporization and deception to get out of what he legitimately owes. Even though such characters are fictional and comedic in the media, real people base their activity from what they see.

How do you get over this? Well, you’ve got to operate in a collateral way which anticipates human nature, and protects against it. You’ve got to define a few features of a person’s egress through life which communicate the truth of their situation regardless of what their words say.


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Distinguishing Tactics

You may require some evidence of employment. Depending on your state’s legality in terms of leasing, you may be able to stipulate renting from you require that a tenant first produce evidence of a certain monthly income threshold. Pay stubs, checking accounts, or other means can help you make this determination.

What you’re looking for is income that is regularly several levels of magnitude higher than rent. If you’re charging $1k per month for rent plus utilities, a single tenant should be making at least $2,500 on average over the precedent six months. If there are more than one tenant, this number can be reduced slightly.

Still, income alone won’t tell you whether or not a person with bad credit will be a good or bad tenant. Sometimes a tenant who has bad credit, but good income, will back out of a lease early owing to tertiary reasons which have nothing to do with money. What you might do as a safety measure is require the first and last month’s rent up front, plus the deposit.

If someone has bad credit, but requisite resources, they’ll be able to pay you that much.

Then you’re guaranteed two months at minimum, plus wear-and-tear control. Still, in some states you can’t evict somebody for a year or more after they move in. The law may be on your side, but present court systems are bloated and overloaded, meaning the length it takes for a court to decide in your favor gives a tenant a year of free rent.

Property Betterment Tactics

Something else you might do is supplement rent with refurbishment. For example, if you’re renting a property that isn’t an apartment, you might let a handyman tenant in who does work on your property as a means of paying his rent. In this way you save money and increase property value.

A DIY deck done in such a way can give you much greater value for a much-diminished cost. Sure, you don’t get direct remuneration; but a skilled enough tenant can be worth more, in the long run, than an increase in your bank account.

Something else you want to do is run what background checks you can legally. While past activity is no concrete indicator of future action, it can be very telling. Someone regularly in and out of the penal system is likely to relapse at some point for some reason, and that could end up compromising your property.
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Hidden Opportunities

A final tactic may be buying property specifically for the purpose of renting to those with bad credit. In such a scenario you’ll have a cut-rate property, but you’ll always have renters, as there are many in today’s society who are on the outs in terms of credit and legal status, but still need a roof over their head.

If you’re savvy, those with bad credit could be your bread and butter. In the end, it all depends on what you have available, and what you’re willing to put up with. Bad credit doesn’t equate to a bad tenant, and good credit doesn’t equate to a good tenant.