Finding ways to help marginal tenants qualify while acceptably mitigating my risk. To be clear, there are only a few things I consider "fixable" using this idea. I don't take people with unpaid evictions or more than one eviction period, violent felony convictions, etc.

1) No landlord history.

2) Marginal credit (550 - 599).

3) Less than 1 year on the job.

Let's say the rent on this Class C house is normally $800. Instead, I offer my "2nd Change Approval" that works as follows:

1) Rent is $1000/month.

2) Deposit is 2x the monthly rent (Missouri limit) = $2000.

3) Grant a 1-year renewal option at $900/month if rent is paid on time 12 out of 12 months and no damages. This creates incentive for good behavior.

This would also assume they qualify in all other aspects like having a job that is solid and garnisheable wages, they are cooperative, etc.

After 1 year...

If all goes well, I receive $2400 in extra rent above my $800/month rent.

If I have to evict, I have a larger cushion than normal. $2000 deposit + however many extra $200 monthly rents I collect before eviction.

Thoughts?

So these tenants are looking for and contacting you to rent a house at $800 then find out that because of whatever reason you have above, now the rent is $1,000 per month and if they "behave themselves" for one year, the rent goes down to $900 per month?

Personally, I look for reasons to reject, not to approve. As soon as I find a reason to reject, I’m on to the next.

Marginal tenants will agree to a higher deposit. Sometimes they can get a qualified cosigner.

Credit score depends upon what is on the credit report. I occasionally see a low credit score where there is nothing on the report to make me think they don't pay their bills.

Advertise it as rent is $800-$1200. Put in the ad that rent is $1200 and well qualified tenants get a big break on the rent.

My thought about it, though, is if the tenant has a history of paying rent, the higher the rent is the harder it will be for him to get the rent paid on time

SID,

Good stuff!

My analysis for last month shows only 1! qualified applicant (military - rented to him),

2 MARGINAL apps

The rest were obvious duds or did not provide complete info such as paystubs.

I find they don't have money so a double deposit won't fly.

Changing the rent is fodder for the Fair Housing police.

One reason they are MARGINAL is they cannot handle money well enough to save up $800-1000 for the first.

I just put them on weekly. I can keep track every 7 days rather than 30, they can sell a guitar, some videos games, or borrow $180 from Granny that week, and I make 13.5 months of rent that year, which is more than a double deposit brought in. (initial deposit plus the 13.5th month of rent)

And I don't have to return it or apply it to cleaning! :)

I also do not offer any "deals". Back when I tried deals they meant nothing to the res. One came back to bite me in court when the judge decided to apply the "deal" to be generous.

We're also having trouble with finding 1 year of employment. MY theory is the Slinky effect. Employers laid of during the pandemic then as it lifted they hired like crazy, but then business was stabilizing and kinda "back to normal" so they started thinning the herd.

Now with business slowing they are laying off again. Last in first out.

We saw this back in '06-08. New leasees with great jobs showing up for work on Monday but the doors were chained shut. Dolly Madison bakery parked a semi across the entrance.

Change the word FODDER to CHUM.

Definitely would be considered "discriminatory" here in NYS. We participate in "HEAP" and they lecture us that our charges cannot be any higher for HEAP recipients than regular customers.

I think some here are misunderstanding how the situation would work. For an applicant who is missing one thing from being approved, the choice would be 1) The application is rejected under our criteria or 2) Here's an option the applicant can choose to move forward.

My state now allows me to charge up to double one month's rent as a security deposit. This is suppose to "protect" the tenant, but in some situation it hurts tenants who are close to being approved. As we all know and can prove without a doubt, even a double security deposit isn't enough to mitigate an eviction, especially in low-income rentals where a rent is less than $1000. That gets quickly used up with unpaid rent, attorney fees, and turnover costs. The simple fact is more money = less risk. Credit card companies do something similar all the time, charging higher interest rates for people with poorer credit. That is 100% legal discrimination based on customer's willingness and ability to pay, which is a legitimate business concern that has nothing to do with protected classes.

My goal is to find ways to house people with an acceptable degree of certainty it will work out well. My state Govt won't let me charge more than double security. Okay, fine... so I'll simply charge higher rent to offset the risk.

Due to the Govt overreactions to the 'Rona, there are now many people who have problems on their rental and payment history. I want to get creative about how we find ways to qualify those that have problems that can be fixed. The last thing we need is Govt in its infinite wisdom trying to "help" again and making everyone's life worse.