We are screening prospective tenants for a 4 bedroom 3.5 bath townhouse. A young couple with 2 children viewed the townhouse and liked it very much. As we began talking about their qualifications, they mentioned that she had delinquent student loans and he had no credit at all! To counter their poor credit, the couple offered to give us double the security deposit! This gesture immediately sent up red flags for us! In the past, we had a prospective tenant throw lots of cash at us, which lead to a poor decision our our part. We promised ourselves that we would never make that mistake again.
Why Would a Prospective Tenant Offer Loads of Cash Up Front? 3 Reasons …
- To cloud your decision-making process
- They never intend to pay anymore rent
- To get a foot in the door
When you have a vacant rental property, you have monthly expenses to pay out, but no rental income coming in, so you may feel anxious about getting a good tenant quickly. Alot of cash offerred up front may affect your judgement. Don’t make any rash decisions. Take a step back and thoroughly screen the prospective tenants. Take a few days so that you can maintain your perspective. To learn 8 steps to screen prospective tenants, click here.
No More Rent Payments
The second reason tenants offer lots of cash up front is because they never intend to pay any more rent to you! They know that once they physically move into your rental property, it is difficult for you to legally remove them. State laws protect tenants, and the landlord must follow the state laws when requesting that a tenant be evicted. To learn what to do when a tenant stops paying rent, click here.
A Foot in the Door
Once the prospective tenant has a signed lease and gets a foot in the door, the center of power shifts from the landlord to the tenant. Experienced tenants know that they are protected by county and state laws, especially Section 8 tenants. In fact, Section 8 tenants are protected by federal laws! What is Section 8? Section 8 is a federal housing program that provides rental assistance to low-income individuals and families.
To wrap up — Be very cautious when a prospective tenant offers large amounts of cash up front!
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The opinions expressed herein are solely those of the Author/WebMaster. Before taking any action, please consult your real estate, financial, and legal advisors.