Re: Thanx everyone , I’ve learned some things , but… - Posted by JohnBoy
Posted by JohnBoy on May 29, 1999 at 10:27:27:
Your making mountains out of molehills. First of all, the name of the game isn’t screw your tenant based on race or whatever. You have a minimum set amount in your mind that you will accept up front. It doesn’t matter who calls. There’s a minimum up front amount I will take to even be “considered”! It isn’t a case of, I want $5k down and your in and then turn around and say your out now because I got someone that said they have $10k to put down. Regardless of what you have to put down I’m going to qualify you before committing to rent to you. If several people show up to apply before I make a final decission then I’ll pick the one I’m most comfortable with regardless of who has more to put down. That’s why I “ask” how much they have to put down instead of telling them how much will put them into the property.
Lets say you have a home with a FMV of $100k that your going to l/o. The LEAST amount your willing to take is say $3k down as option consideration. You don’t advertise $3k needed to get in. When someone calls on your ad you ask, “How much can you put down?”
If one person says I can put down $2k, you would say I’m sorry but the minimum I’ll except is $3k. If another person says I can put down $10k and another says I can put down $4k, which are you going to be inclined to take? Probably the one with $10k, right?
So why did you lean towards the one with $10k?? Was it because of his accent, race, religion, sex, etc.?? NO! It was because he has more money period! The more money someone has to invest in the property the more likely they will tend to take care of the property. I’m in business to make a profit, not sit around and worry about some sue happy idiot out there looking to make an easy buck off me by playing the race card because they didn’t qualify by my standards to l/o my property.
Personally I could care less what race someone is. What I care about is how much down, how much a month, and can they afford the payments. Then from that point it’s, hows their credit and can they qualify in a year or two to get a new loan so they can exercise their option. Are the things they will be required to do over the next year or two things that are within reason to accomplish providing they put forth the effort to accomplish them.
Getting them qualified for a new loan will be a combination of my experience and running their credit by a good mortgage broker to see if their chances of getting a new loan are possible and providing they have done the things they were suppose to do on cleaning up their credit. This could be a case of needing to pay down on some credit card debt to get their debt ratios down. Can they afford to accomplish this and afford to pay my rent if they commit to this. It may just be a matter of needing time to re-establish their credit by showing they can pay their bills on time since filing a recent BK. Whatever the problem is, can they accomplish cleaning it up over the next year or two while they’re paying rent living in my property?
After I satisfy my own judgement and if I think this is something that’s within reason if they just put forth a little effort then I’ll sit with the tenant and get their input on the matter. What do they feel they can do. Will they feel comfortable having to make the commitments needed to accomplish this so they can get refinanced in a year or two?
If they haven’t lied about anything and I’m satisfied and the tenant says they’re comfortable with everything and I’m satisfied with the way they answered everything, then I’ll move forward with letting them l/o the property. All of these factors will play a major part on how much I may require them to put down before I l/o my property to them.
So you see, if I need a minimum of $3k up front and caller #1 calls and has $2k, caller #2 has $4k, and caller #3 has $10k, I’ll tell caller #1 right up front that $2k won’t cut it. They will need at least $3k before I even “consider” them. Caller #2 and #3 I’ll say, I might be able to work with that. It all depends on you, your credit, income, references, etc. You see, I didn’t say I “want” that amount down. I said I “might” be able to work with that.
If after talking to caller #2 and #3 turn out to be completely equal as your putting it, like having the same credit, same credit score, (which by the way, credit scores are worthless! One could have a decent credit score and have all collection accounts on their credit while another person could have a lower credit score with 0 collection accounts and all bills paid on time! I know because I’ve seen this plenty of times. I seen one credit file that had 16 outstanding collection accounts and not one good credit reference with a score of 640. Another person had a score of 630 with 0 collections and all bills were paid on time. So don’t go by credit scores. Personally look over their credit file.) same type of jobs, same income, same everything and both equally qualify exactly the same, but one has more money than the other one has, then I’ll naturally take the one with the most money to put down.
If the person with the lessor amount to put down happens to be the minority in this case, well, welcome to America my friend! Freedom of choice, freedom of speech, and free trade. I’ll charge what I want, to whom I want, for whatever reason I want. If you don’t like the price or terms, then you have the right not to buy it!
Oh, by the way, if you ever did happen to end up with 2 people that qualified exactly the same with credit scores, income, job history, references, etc., and they meet your qualifications to rent to, then I would seriously work on finding another house so I could get both of them!