Posted by Steve (OH) on November 06, 2000 at 07:47:28:
This makes me wanna…I’ll be puking in the next room if you need me! Man, that stinks!
Security Deposit for tenants with bad credit - Posted by Steve (OH)
Posted by Steve (OH) on November 01, 2000 at 14:09:35:
We recently purchased a 12 unit complex and are having some problems getting tenants with decent credit/references in there. I have decided to allow two of them in even though their credit was below average and have them pay additional money on top of the one month security deposit. In other words, rent is 395/month and the security deposit is 395. I am charging another deposit of 200 above/beyond the 395. I figure this would help to minimize the risk of these higher risk tenants. What does everyone think of this?
Thanks.
Re: Security Deposit for tenants with bad credit - Posted by John(NH)
Posted by John(NH) on November 02, 2000 at 14:07:26:
In my state, I have to be aware of this law:
In New Hampshire, a landlord who owns more than six units can ask for no more than one month?s rent or $100, whichever is larger, as a security deposit.
Bummer. Might want to check your state laws as well.
Just an observation - Posted by Rick
Posted by Rick on November 02, 2000 at 01:13:23:
Your charging a security deposit that is the same amount as rent raised a red flag in my mind. I went back and researched and sure enough, in one of my courses, (Carleton S) he said: “Never charge the same amount for a security deposit as the rent, or the tenant is likely to treat it as ‘last months rent’”. Anyone have any thoughts on this?
Re: Security Deposit for tenants with bad credit - Posted by JPiper
Posted by JPiper on November 01, 2000 at 19:58:57:
I rent to people with poor credit, BUT…what I like to see is a positive landlord reference. If I have a question in my mind then I like to see receipts or cancelled checks for rent payment. Keep in mind that notwithstanding credit, some people prioritize what they pay. If I can prove to myself that the priority is the rent payment, and they don’t necessarily pay a hospital bill, school loan, or credit card thereby giving a poor credit report, I’m still open to them.
More deposit? Like the others said a small additional deposit won’t help much, and many times especially in lower end rentals they won’t have the dough.
Just remember, you’re looking to determine who pays the rent, not who pays their credit card. They aren’t necessarily one and the same thing.
JPiper
Re: Security Deposit for tenants with bad credit - Posted by phil fernandez
Posted by phil fernandez on November 01, 2000 at 19:06:10:
Steve,
Brent’s post hit the nail on the head. Will an extra $200 security deposit offset not collecting any rents for the next six months.
I base my renting criteria very heavily upon a credit check. Bad credit does not get you into one of my units, no matter how much extra I could collect. As the saying goes, that might be the only money you will ever see from them.
Re: Security for tenants with bad credit-- Enough? - Posted by Brent_IL
Posted by Brent_IL on November 01, 2000 at 17:17:53:
I know a brilliant attorney in Chicago who limits his practice to evictions. He likes the hours and makes a lot of money. He charges people facing eviction one-half of their monthly rent per month and guarantees 5 to 6 months. No tricks, just statutory filings. He is a very busy man. If your renters found someone like him, would $200 offset 6 months of no income?
Re: Security Deposit for tenants with bad credit - Posted by Mark (SDCA)
Posted by Mark (SDCA) on November 01, 2000 at 17:03:16:
It sounds ok to me… What income level proeprty is this? For my low to mod income properties, I don’t even bother with a credit check. I know what is going to be there… Often no credit at all. These people don’t bother with credit. A lot of them don’t even have a checking account.
I take a full rental application and do a background check.
Regards,
Mark
Legal limits on security deposit - Posted by Bert G
Posted by Bert G on November 04, 2000 at 12:19:07:
Its similer here in ND. Security deposit can’t exceed 1 month rent. But there’s a loophole. If you allow pets, you can charge an additonal pet deposit up to a combined total of $1500. I allow pets in all my units, but screen both the tenants and the critters carefully.
Re: Security Deposit for tenants with bad credit - Posted by Steve (OH)
Posted by Steve (OH) on November 02, 2000 at 14:11:01:
Good point, John. Anyone doing business in Ohio aware of this??
Thanks.
Re: Just an observation - Posted by phil fernandez
Posted by phil fernandez on November 02, 2000 at 06:29:57:
I also use a slightly different amount for the security deposits for just the reason you mention.
Example : monthly rent = $575
security deposit = $600
That way the tenant has a clear distinction between what is the security deposit and what is the last months rent.
Gotta Love The Lawyers! Met one at the hearing… - Posted by Carmen_FL
Posted by Carmen_FL on November 03, 2000 at 16:48:16:
What annoyances!
These tenants I have have stayed in my house 2 months for free, and the only reason that they are to be moving (notice they are still there) on Monday is that we reached a “settlement” with their (no words to describe) attorney - WE paid HIM (the attorney) $625, and he wrote up a writ of posession to be delivered Nov. 6. If they’re not out, we can call the Sheriff and get them out. The only reason he did this (not in the best interest of his clients), I believe, is that he knew which side his bread was buttered - the tenants didn’t even have the $75 retainer, and he saw that if the case dragged on, he would probably be working for free.
Gotta wonder …