There was a time when renting an apartment or a private residence was as simple as pulling up to the For Rent sign, looking at the place and signing a lease. Today, that market has become influenced by financial clout, sad stories and significant tenant demand.
Rental = Financial Relationship Between Strangers
From Landlord's Perspective
Today’s landlords are inundated with applications often varying in qualifications. Many applicants have recently suffered due to the housing economy of short sold and foreclosed homes. Bring in job loss or illness, and often you will find tenants that have suffered from all 4. Furthermore, financial difficulties have led many into divorce and bankruptcy. Reading through stories and tenant applications can really bring perspective to what the US economy is going through.
Regardless of previous scenarios, the landlord has only a couple of questions in mind:
Will you pay your rent, and on time?
Will you take good care of the property?
Although your intentions may be of highest morals and good intent, your credit history and credentials may send different signals. You still need a place live, and if moving in with parent’s or friends is not an option, here are some things you can do:
Brush Off & Get Organized:
1. Shop within your means: Keep Monthly Rent at 30% – 35% of your monthly income. The time to be budget sensitive and realistic is now, but often landlords are willing to overlook credit history if you can prove strong income to cover the rent.
2. Show off your preparedness: Provide a complete package of information for landlord’s consideration. If you were the landlord with a well priced home and were to receive 20-30 applications, which one will you look at first? What you need:
- Completed Rental Application: This will identify all parties moving to the home, how many cars, pets, etc. It will also give reference for previous landlords, employers, etc.
- Credit Report: Strongly suggest a report that provides the 3 credit scores as many people do not know how to read a credit report, including Realtors and landlords. (Here is one option: MySmartMove.com)
- Provide Pay Check Stubs: You need to prove that what you wrote on the application matches. 2-3 Months will do and speak volumes. (If you have an employment letter, it will help)
- Compelling Letter: Sometimes your credit and earnings are less than favorable and the only leg you have to stand on is hope. If you feel that you can develop a credible story that will reach the landlord’s heart, write it down, but be brief, and genuine.
- Present it all at once: Piece mailing information is frustrating to a busy recipient. They may require more information and even more proof, but you got their attention. Be organized, honest and keep the ball rolling.
Additional items that may help:
- Direct Deposit: Most landlords are willing to take a chance knowing they are getting paid directly from your employer.
- Additional Rent / Security Deposit Up-front: It has become common place to see people coming out of a short sale or foreclosure willing to pay 1 year in cash upfront. The money may have come from them avoiding to make mortgage payments on their home, or elsewhere, however bad credit or unemployment can force some tenants to be more aggressive.
- Consider a Realtor or Rental Company: Realtors and Rental Companies have quicker and more accurate access to real estate inventory, and also have quick access to the landlord through the listing agent. If you find your self calling from online classifieds and hearing “rented!” too often, you may be shopping in a very aggressive market and could use professional help.
- Be Open to Terms: Some landlords may want to do a trial basis rental of 6 months then month-2-month, or the reverse of that arrangement. Remaining flexible will help you in this situation.
- Beware of Short Sales (if looking for long-term): Many homeowners have become landlords simply because they could not sell their home or are underwater on their mortgage. Often mortgage payments are not being made on a short sale meaning that the mortgage company may be paying attention to the home with intent to retake possession. There are advantages and disadvantages to this situation depending on your flexibility. If you have additional question on this topic please email me and I can dig in deeper.
Although the above information is geared for the toughest of credentials, tenants with excellent income and above average credit scores should follow the same steps to effectively procure the home that is right for you. It will make you stand out above the rest and help maintain leverage in your corner.Mario Bilotas, Four Daughters Real Estate email Mario