Landlord Question and Answer Forum

Second Chances

I am contemplating renting my one bedroom condo to someone who is going through a foreclosure of her townhome. Since this appears to be "risky", my plan is to have 2-months rent placed in escrow. My question is: should I be even giving this person the time of day? She was laid off in the past but is currently employed.

A foreclosure in itself is not a sign of a pattern of financial irresponsibility, it depends on the circumstances behind the foreclosure. It would best to require a rental history that spans a few years to determine if the prospect has a history of rental responsibility. Pay close attention to dates, gaps in dates, etc. to make sure that there is a full accurate history, preferably history that is verifiable (not friends, relatives, etc.). You may also wish to require employment history that spans the same number of years (up to you - some people ask for up to 5 years), and a salary history. You may also want to make sure that her income is around 2.5 - 3 times the amount you are charging for rent. If you can, get a credit report. If most delinquent charges are recent (instead of a long pattern) it could be because the lay-off only not because she is a financial risk. It may seem a bit structured, but it serves to protect you as the LL and the tenant as well.

Posted by Lynn S, GA on Tuesday, August 17, 2010

I agree with Lynn from GA> There are many reasons for foreclosure.It the reason for foreclosure has been cured(ie divorce final or cancer cured) by all means give them a chance. You can begin eviction within 5 days of any late rent. Most folks are really diligent after a bad credit experience. I was a foreclosure prevention specialist for 5 yrs for FHLMC and GMAC and people will work hard to rebuild their dignity

Posted by cornelis v, CT on Thursday, August 19, 2010

Thank you all for the advice; I believe in 2nd chances. She has lived in the home for most of her life and may be in her 50s. Of course, this means there is not much rental history... Her daughter will be attending college within a month and she has grandchildren. Once the rental application is completed I will know much more, i.e. credit report and recent pay stubs are required with the application. Take care.

Posted by Blanche L, VA on Tuesday, August 24, 2010