“Should I rent to someone with a foreclosure?”
Answer: probably not.
Please be aware that I am sensitive to anyone who is going through a foreclosure. I am giving this advice from the vantage point of a real estate investor.
Foreclosed applicants on average have a 24% lower credit scores. They also have four times as many 30 or more day delinquents or derogatory.
What that means, is history has a way of repeating itself. A person is who is foreclosed on, has a poor history of paying obligations on time. Do you really want to risk your investment to someone like that? Take the chance that they will not pay or pay late? Evictions are not a fun ordeal.
It’s not only tempting, but some times feels necessary to fill a vacancy quickly. Never let your feelings of disparity cause you to give up your standards. Create your standards for tenant screening and stick to them.
Hint on tenant screening. Renting Authority provides a free Applicant Rating Report with every credit report. Use the drop down menu next to the credit score and select the “Applicant Rating Report.” This report shows you how an applicant compares to other applicants across the country.
Please contact me with any questions regarding this topic.
Thanks,
Troy
888-674-9181
Welcome back!
August 29th, 2008 at 3:18 am
I know some people might say it’s silly, but I applaud your little disclaimer there at the beginning of the post. Sometimes it’s hard to be on the business side of things.
September 15th, 2008 at 8:51 pm
It is a pretty touchy topic.
One is compelled to have compassion.
Life is tough and things happen.
I guess you can’t really check the credit, since it would be goofed up any ways.
But you could see patterns in the applicant’s history.
I guess asking for a reasonable deposit and using personal judgement is key here.
Not an easy question to answer.
February 11th, 2009 at 11:50 am
Thanks, AGREE!!! I just experience such a situation. I fully believe they were trying to set us up!
Did not fall for it!!!
March 10th, 2009 at 11:33 pm
Very nice information. Thanks for this.
March 20th, 2009 at 1:12 pm
I usually don