Landlords, let's discuss tenant screening.
 

Got a vacancy coming up and so the Craigslist ad has been getting a lot of response. One lady who checked the place out yesterday is a year out of BK. She did BK because her mortgage servicer would not agree to a short sale on her previous house, which she bought at the peak of the market and then had to move to be closer to her job and for her kid's school. Lawyer told her BK was the only way out of that house. This part of the story sounds pretty believable to me. But she said she makes $90-100k and has been late on rent twice in the last year, most recently last month. I admire her candor, but this late rent story, especially considering her income, worries me more than the BK. Though the BK also worries me, since I'd pretty much not be able to use dinging her credit as any incentive for her to pay up, if it ever came to that.

Since I'm in AZ and can't meet this lady, I'm totally dependent on her word. Obviously, her credit is shot. How to you rent to someone just out of BK? Collect several mos. rent upfront? Special lease conditions? I'm not set on doing this, as others are still checking out my place, but she's the first one who's said she wants it.

Two types of renters-

Those that bring stories, and those that bring a checkbook.

You want the latter.

3 months rent + security deposit. Loses it all if late on rent. If she agrees...

What are the eviction laws where the property is....

Does not pass smell test. Wonder if here credit report shows any other collections? I would be willing to overlook the BK if her credit history was clean. Basically, you must avoid applicants with a pattern of bad money management.

+1 to what Jurgen said. I'd rather have one of my houses sit empty than have a "bad" experience. If you do proceed, I'd consider a "month-to-month" from the very beginning (along with your other ideas), as a long term lease doesn't buy you squat if it doesn't work out. Good luck!

Put yourself in that position (assuming you are a financially responsible adult! :) ). Would you agree to terms like 3 months up front + security deposit? I would. I'd know I'd eff'd up pretty badly and I'd have to suck it up and deal with things like a large security deposit.

If you doubt her income, ask her for pay stubs, or if she's self-employed, tax mailings.

If she balks on any of this, chances are she's full of BS. Not worth your time. Especially if it came through craigslist, the home of the flake.

And what would I do with that three mos. upfront rent? Use it as rent or just hold it as a large sec. deposit? If she moved in May 1, does that means she's paid up for the first three mos. or the last three mos.?

i friend recently had a bankrupcy, it was a 13 or 11.......he is required to pay the gov 2900 per month, maybe she is on similar terms?

She says she made to too much for Chapter 7 and had to file Chapter 11.

Exactly - I was a Landlord a few years back - Once you have someone in there you play H3ll getting them out. If you can't find a qualified renter better to let it sit empty than to deal with all the crap that comes from a non=payer

Keep looking.

If she's telling you about her previous "late rent", she's just warming you up so you're not surprised when she does it to you.

Sounds like too much drama, just my $0.02. I'd move on.

look in their car. good indication of how they live. if it's a shat hole it's pretty much a given your property will be soon enough. that has always worked for me in addition to credit reports and the other more standard back ground checks

I can't look in her car, as it's in VA and I'm in AZ. I think I'm gonna pass on this one. The two pilots from Dulles sound like a better option.

Chapter 7 is liquidation.

Chapter 11 is businesss reorganization (although if you are a sole proprietor/self employed and individual can use Ch 11).

Chapter 13 is individual reorganization.

Liquidation=Here's what I have. Take it. I'll walk away owing nothing.

Reorganization=here's what I have, here's what I want to keep. I'll set up a payment plan to pay the Bankruptcy Court (thru Trustee) over the next 1-5 years to pay a portion of my debts back.

Recent legislative changes restrict use of chapter 7 liquidation.. basically, if your income is over the median income for the state where you live you are not allowed to just walk away...particularly with regard to unsecured debt (read: Credit Card debt). If your income reaches a certain level you have to pay at least a part of what you owe back. Based on what your earnings are. Not suprisingly, cc companies and consumer credit co's lobbied hard for this legislation.

Here's the problem with a Ch 13...your income falls to below median income level so you switch from a 13 to a 7 and you get out from under the 13 plan. Affectionally known as a Ch 20;) Or you stop paying on the plan you set up and the Bankruptcy court throws out your case. Then all the creditors cacome after you because the automatic stay is no longer in force. And you're way down the line to get paid.

Bottom line...somebody a year into a Ch 13 is fraught with problems...If they're 2-3 years into it and their repayment plan is current, less so.

No way! Think about it - if she stops paying rent, you need to have yourself covered for a period of time. Of the 3 months paid up front, 1 is for the first month of occupancy, the other are for the last 2. So if she runs out of money and starts making excuses, you've got one month to get money out of her, then one month to evict her and find another tenant, all paid for up front. You will have to pay interest on that money, which should be worked into the lease agreement. I would suggest prime, maybe prime + 1, nothing more. As said above, have a non-binding, ongoing lease agreement. Rent rate is guaranteed for one year but occupancy can be terminated at any time by either party with 2 weeks written notice.

True dat! But insist on live web cams throughout the house. To monitor stewardess activities. Purely for security purposes;)

Yeah just make the rental document REALLY REALLY long, like a few thousand pages. Somewhere in there you can slip in the "webcam" provision and they probably won't get to it.

RL, have you looked at this information before?

Virginia Eviction Questions and Answers

I didn't have a background or credit check done when I signed my first lease for the place I'm in right now. Of course, I paid the entire years rent up front.