New Tenant.... possibly

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mrgeeze
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New Tenant.... possibly

Post by mrgeeze » Sun Nov 17, 2019 9:14 am

Just put the townhouse out for a new renter.
Suburban Va DC Metro area.

Got an applicant who looks good on paper.
Recently arrived in US.
He has an H1-B visa and employment as a senior software developer.
According to his app his income makes the rent about 20% of gross pay. Not a financial stretch.

But no credit history in the US and little or no audit trail
A letter of reference from the CEO of a software company near by.

Seems like a decent enough guy.
I''d like to be fair to him.

Any alarms going off.
Any risk mitigation strategies?

At present I don't have any other apps.
We're market priced in a good location.

Arbol
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Re: New Tenant.... possibly

Post by Arbol » Sun Nov 17, 2019 9:27 am

Hi.

Have you called the company to verify his employment?

An H1-B visa is not easy to get. Generally, it's a highly skilled engineer who has a very good income.

Topic Author
mrgeeze
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Re: New Tenant.... possibly

Post by mrgeeze » Sun Nov 17, 2019 9:30 am

A call to his employer and some proof of the H1-B are probably next on the list.
His letter of reference is from the CEO of the company and cites the H1-B visa.
He seems to have very gainful employment.

Traveler
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Re: New Tenant.... possibly

Post by Traveler » Sun Nov 17, 2019 10:15 am

Can you ask for some paystubs to verify income? If he is new to the US, he probably doesn't yet have a tax return.

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Sandtrap
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Re: New Tenant.... possibly

Post by Sandtrap » Sun Nov 17, 2019 10:46 am

After doing your due diligence and background research and verification.. .
6 months lease with month-to-month automatic mo-to-mo renewal thereafter.
If there are any issues, you are 6 months then 30-45 days away from solving any problems with a non lease renewal notice.
Of course, non payment of rent, late payment, etc, is an even shorter solution if there is a rent payment issue.

j :happy
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inverter
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Re: New Tenant.... possibly

Post by inverter » Sun Nov 17, 2019 10:50 am

I work with a software developer who is on a H1-B, and he is one of the smartest and most reliable people I know. I wouldn’t hesitate to rent to this guy after verifying his employment.

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HueyLD
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Re: New Tenant.... possibly

Post by HueyLD » Sun Nov 17, 2019 11:09 am

It appears that an employer of H1-B holders tends to transfer them all over the country frequently because it is easier to move them around.

Depending on how your lease reads, you may want to consult an expert to know how to handle such a situation with minimal financial impact.

IMO
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Re: New Tenant.... possibly

Post by IMO » Sun Nov 17, 2019 1:27 pm

Sandtrap wrote:
Sun Nov 17, 2019 10:46 am
After doing your due diligence and background research and verification.. .
6 months lease with month-to-month automatic mo-to-mo renewal thereafter.
If there are any issues, you are 6 months then 30-45 days away from solving any problems with a non lease renewal notice.
Of course, non payment of rent, late payment, etc, is an even shorter solution if there is a rent payment issue.

j :happy
Agree on this thought.
In theory you could just advise person that since he doesn't have a work history in the US that you can verify, that you want to start with a month to month lease. However, keep in mind, your homeowner's insurance for a rental may not allow rentals under 6 months (mine does not), and thus you may need to do a 6 month lease going month to month from that point.

There is a common perception that having a long lease is a great thing as a landlord as it somehow protects you as a landlord. This is a completely false premise. A long lease only gives every advantage to the tenant. A tenant can simply end a lease of any length at his/her desire with minimal penalty. If a tenant opts to move out before his/her lease term, you as the landlord have to make significant efforts to re-rent the place to mitigate your losses. At best, the tenant will lose 1 month's rent as the penalty. If a landlord wants to get a bad tenant out early on a long lease, good luck on that.

Also having a tenant who wants out of the lease simply skip out can leave other problems, such as turning off the heat/electricity in the middle of the winter causing frozen pipes/damage, etc. Best to have a lease go month to month and let a tenant leave if they want/need to, it serves both parties interest better. With a good tenant and a good landlord, this can be continued for years and years.

ARoseByAnyOtherName
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Re: New Tenant.... possibly

Post by ARoseByAnyOtherName » Sun Nov 17, 2019 1:30 pm

inverter wrote:
Sun Nov 17, 2019 10:50 am
I work with a software developer who is on a H1-B, and he is one of the smartest and most reliable people I know. I wouldn’t hesitate to rent to this guy after verifying his employment.
Is mrgeeze renting to the same software developer that you work with?

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JoeRetire
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Re: New Tenant.... possibly

Post by JoeRetire » Sun Nov 17, 2019 1:31 pm

mrgeeze wrote:
Sun Nov 17, 2019 9:14 am
Recently arrived in US.
no credit history in the US and little or no audit trail


Any alarms going off.
You don't hear any alarms?
Are you new to the landlord business? Do you regularly rent to folks with no credit history?
Don't be a lemming.

Goal33
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Re: New Tenant.... possibly

Post by Goal33 » Sun Nov 17, 2019 1:33 pm

I think this is fine. Because of no credit history maybe you can ask for a larger deposit.
A man with one watch always knows what time it is; a man with two watches is never sure.

Arbol
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Re: New Tenant.... possibly

Post by Arbol » Sun Nov 17, 2019 1:37 pm

As a landlord, I agree with IMO and Sandtrap.

You have one potential renter who has a great job (which you need to verify) but lacks a history because he's new to the US.

Month to month would be best.

My leases are one year and month to month afterwards. The reason for the one year is so I don't have short term renters.

A new tenant offered to pay the full year rent if he could get a small discount. I politely rejected the offer because I want to keep my options open if they turn out to be horrible tenants.

Best of luck.

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JoeRetire
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Re: New Tenant.... possibly

Post by JoeRetire » Sun Nov 17, 2019 1:40 pm

Arbol wrote:
Sun Nov 17, 2019 1:37 pm
My leases are one year and month to month afterwards. The reason for the one year is so I don't have short term renters.

A new tenant offered to pay the full year rent if he could get a small discount. I politely rejected the offer because I want to keep my options open if they turn out to be horrible tenants.
But a new tenant gets a one year lease anyway, right?
And presumably by then you would know if they are horrible tenants or not?
Don't be a lemming.

Arbol
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Re: New Tenant.... possibly

Post by Arbol » Sun Nov 17, 2019 1:52 pm

JoeRetire wrote:
Sun Nov 17, 2019 1:40 pm
Arbol wrote:
Sun Nov 17, 2019 1:37 pm
My leases are one year and month to month afterwards. The reason for the one year is so I don't have short term renters.

A new tenant offered to pay the full year rent if he could get a small discount. I politely rejected the offer because I want to keep my options open if they turn out to be horrible tenants.
But a new tenant gets a one year lease anyway, right?
And presumably by then you would know if they are horrible tenants or not?
If someone is intent on breaking a lease, it doesn't matter how long the lease is for. It's simply a deterrent to potential short term renters.

I know what it takes to get an H1-b visa and the type of people who get them.

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JoeRetire
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Re: New Tenant.... possibly

Post by JoeRetire » Sun Nov 17, 2019 1:56 pm

Arbol wrote:
Sun Nov 17, 2019 1:52 pm
JoeRetire wrote:
Sun Nov 17, 2019 1:40 pm
Arbol wrote:
Sun Nov 17, 2019 1:37 pm
My leases are one year and month to month afterwards. The reason for the one year is so I don't have short term renters.

A new tenant offered to pay the full year rent if he could get a small discount. I politely rejected the offer because I want to keep my options open if they turn out to be horrible tenants.
But a new tenant gets a one year lease anyway, right?
And presumably by then you would know if they are horrible tenants or not?
If someone is intent on breaking a lease, it doesn't matter how long the lease is for. It's simply a deterrent to potential short term renters.

I know what it takes to get an H1-b visa and the type of people who get them.
Okay. I don't see how that is related to "I politely rejected the offer because I want to keep my options open".
Don't be a lemming.

delamer
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Re: New Tenant.... possibly

Post by delamer » Sun Nov 17, 2019 1:59 pm

Goal33 wrote:
Sun Nov 17, 2019 1:33 pm
I think this is fine. Because of no credit history maybe you can ask for a larger deposit.
That was might thought too.

Or last month’s rent in advance? (I’ve been out of the rental market for awhile.)

Arbol
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Re: New Tenant.... possibly

Post by Arbol » Sun Nov 17, 2019 2:00 pm

JoeRetire wrote:
Sun Nov 17, 2019 1:56 pm
Arbol wrote:
Sun Nov 17, 2019 1:52 pm
JoeRetire wrote:
Sun Nov 17, 2019 1:40 pm
Arbol wrote:
Sun Nov 17, 2019 1:37 pm
My leases are one year and month to month afterwards. The reason for the one year is so I don't have short term renters.

A new tenant offered to pay the full year rent if he could get a small discount. I politely rejected the offer because I want to keep my options open if they turn out to be horrible tenants.
But a new tenant gets a one year lease anyway, right?
And presumably by then you would know if they are horrible tenants or not?
If someone is intent on breaking a lease, it doesn't matter how long the lease is for. It's simply a deterrent to potential short term renters.

I know what it takes to get an H1-b visa and the type of people who get them.
Okay. I don't see how that is related to "I politely rejected the offer because I want to keep my options open".
https://ohmyapt.apartmentratings.com/5- ... -rent.html

https://www.quora.com/If-I-tell-a-landl ... er-seekers

Easier to evict a tenant who hasn't paid rent in advance.

In my 15 years as a landlord of multiple properties in California, I have never had to evict any tenant. Potential tenants must pay a credit, employment, and criminal check. I've only had to kick out one tenant who decided to start an illegal home business - you can't run a silk screening operation with chemicals in a home. That family left without any problems. During the recession, I rented to folks who lost their homes and had less than stellar credit. Each was evaluated based on their circumstances.
Last edited by Arbol on Sun Nov 17, 2019 2:24 pm, edited 1 time in total.

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JoeRetire
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Re: New Tenant.... possibly

Post by JoeRetire » Sun Nov 17, 2019 2:23 pm

Arbol wrote:
Sun Nov 17, 2019 2:00 pm
Easier to evict a tenant who hasn't paid rent in advance.
Now I understand your point. Makes sense, thanks.
Don't be a lemming.

Topic Author
mrgeeze
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Re: New Tenant.... possibly

Post by mrgeeze » Sun Nov 17, 2019 3:30 pm

JoeRetire wrote:
Sun Nov 17, 2019 1:31 pm
mrgeeze wrote:
Sun Nov 17, 2019 9:14 am
Recently arrived in US.
no credit history in the US and little or no audit trail


Any alarms going off.
You don't hear any alarms?
Are you new to the landlord business? Do you regularly rent to folks with no credit history?

Yes I do hear some alarms.
That's why I posted.
I tend to be a little less trusting than many.

I've been in the lanlord business a few times over the last 30 years.
Only had one bad tenant, the very first one.
Really don't want another one.

On the other sub thread regarding short term leases.
My rental model works best if I get 2-3 years out of a tenant.
Each year I put aside a months rent for when they move out.
I have enough in the bank for a quick carpet caulk and paint then its back on the market.

I believe a lot of landlords don't recognize how turnover can significantly impact your bottom line.
And they forget about recapture biting them in the behind when they sell.

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JoeRetire
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Re: New Tenant.... possibly

Post by JoeRetire » Sun Nov 17, 2019 3:37 pm

mrgeeze wrote:
Sun Nov 17, 2019 3:30 pm
Yes I do hear some alarms.
That's why I posted.
I tend to be a little less trusting than many.
I hear you. I'm not very trusting either.

For me, "no credit history" would be the end of it.

I wish you well.
Don't be a lemming.

Kennedy
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Re: New Tenant.... possibly

Post by Kennedy » Sun Nov 17, 2019 3:46 pm

JoeRetire wrote:
Sun Nov 17, 2019 3:37 pm
mrgeeze wrote:
Sun Nov 17, 2019 3:30 pm
Yes I do hear some alarms.
That's why I posted.
I tend to be a little less trusting than many.
I hear you. I'm not very trusting either.

For me, "no credit history" would be the end of it.

I wish you well.
I am less trusting than most (in my opinion) as well. I have been a landlord of multiple properties for over 15 years and have seen it all. However, I would verify the applicant's employment (call the company's HR dept, ask the applicant for a copy of his employment offer letter, get a copy of the applicant's passport to verify person against his photo) and sign him up in a heartbeat.

Arbol
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Re: New Tenant.... possibly

Post by Arbol » Sun Nov 17, 2019 3:51 pm

An H1-B visa holder can stay up to 3 years in the US, so this prospective tenant may work out for you.

I have rental properties in Mira Mesa, a community of San Diego, CA. Qualcomm is headquartered in Sorrento Valley, right next to Mira Mesa. Qualcomm hires lots of H1-B Indian engineers. I've rented to H1-B visa holders and they've been great tenants.

Your point about turnovers is so true. Find good quality renters who will stay for a long time. Less work. Better returns.

MarkerFM
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Re: New Tenant.... possibly

Post by MarkerFM » Sun Nov 17, 2019 4:58 pm

The simplest solution to the issue would be to have the employer guarantee the lease.

When I moved to NYC for my job many years ago, the landlord (a wonderful woman who had stretched to buy this apartment as an investment) was uneasy. So, I talked to my employer and they guaranteed the lease. They were actually paying the rent as well, but that's another story. After the first year, no more guarantee was needed even though I picked up direct responsibility for the rent.

Trader Joe
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Re: New Tenant.... possibly

Post by Trader Joe » Sun Nov 17, 2019 5:01 pm

mrgeeze wrote:
Sun Nov 17, 2019 9:14 am
Just put the townhouse out for a new renter.
Suburban Va DC Metro area.

Got an applicant who looks good on paper.
Recently arrived in US.
He has an H1-B visa and employment as a senior software developer.
According to his app his income makes the rent about 20% of gross pay. Not a financial stretch.

But no credit history in the US and little or no audit trail
A letter of reference from the CEO of a software company near by.

Seems like a decent enough guy.
I''d like to be fair to him.

Any alarms going off.
Any risk mitigation strategies?

At present I don't have any other apps.
We're market priced in a good location.
Did you verify his employment and compensation?

Goal33
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Re: New Tenant.... possibly

Post by Goal33 » Sun Nov 17, 2019 5:06 pm

MarkerFM wrote:
Sun Nov 17, 2019 4:58 pm
The simplest solution to the issue would be to have the employer guarantee the lease.

When I moved to NYC for my job many years ago, the landlord (a wonderful woman who had stretched to buy this apartment as an investment) was uneasy. So, I talked to my employer and they guaranteed the lease. They were actually paying the rent as well, but that's another story. After the first year, no more guarantee was needed even though I picked up direct responsibility for the rent.
Aside from your case this sounds like the most complex solution.
A man with one watch always knows what time it is; a man with two watches is never sure.

nydoc
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Re: New Tenant.... possibly

Post by nydoc » Sun Nov 17, 2019 5:51 pm

I am on H1b visa. Income is 600k. Credit is 790.
A person on H1b visa will most likely have a good stable income, education, drug free, no bad visitors, will pay rent exactly on time, least complaining and overall trouble free tenant. They are vetted by USCIS and DHS. They don’t want to get into any trouble to prevent any future immigration problems. Out of all the applications, I will select this one.

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JoeRetire
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Re: New Tenant.... possibly

Post by JoeRetire » Sun Nov 17, 2019 7:01 pm

MarkerFM wrote:
Sun Nov 17, 2019 4:58 pm
The simplest solution to the issue would be to have the employer guarantee the lease.
Interesting. I've never heard of that.
When I moved to NYC for my job many years ago, the landlord (a wonderful woman who had stretched to buy this apartment as an investment) was uneasy. So, I talked to my employer and they guaranteed the lease. They were actually paying the rent as well, but that's another story.
Hmm.

I wonder how many employers would guarantee a lease if they weren't also paying it.
Don't be a lemming.

warner25
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Re: New Tenant.... possibly

Post by warner25 » Sun Nov 17, 2019 7:08 pm

IMO wrote:
Sun Nov 17, 2019 1:27 pm
A long lease only gives every advantage to the tenant. A tenant can simply end a lease of any length at his/her desire with minimal penalty. If a tenant opts to move out before his/her lease term, you as the landlord have to make significant efforts to re-rent the place to mitigate your losses. At best, the tenant will lose 1 month's rent as the penalty.
Somewhat off topic, but I'm curious about this as a renter. A few years ago, my wife and I moved to a DC/NOVA suburb and signed a two-year lease on a house without viewing it first in person. Once we got into the house, we hated it but felt stuck. Our early termination clause said we were liable for the full value of the lease, which was like $70k, minus whatever the owner could re-rent it for. It seemed like it would be very easy for the owner to drag his feet for a few months and then set the asking price too high so that it sat vacant, or rent it for way below market value so we'd still be on the hook for a bunch of money. I know the law requires a reasonable effort by the owner to minimize losses, but how does that really work out? I couldn't stomach the thought of being chased for all that money, plus the cost of a lawyer to take the owner to court, plus the cost of renting a similar place to live while going through this process. Basically it felt we like we shouldered all the risk so we stayed to the end. It was one of the most gut-wrenching experiences of my life.

IMO
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Re: New Tenant.... possibly

Post by IMO » Sun Nov 17, 2019 10:56 pm

warner25 wrote:
Sun Nov 17, 2019 7:08 pm
IMO wrote:
Sun Nov 17, 2019 1:27 pm
A long lease only gives every advantage to the tenant. A tenant can simply end a lease of any length at his/her desire with minimal penalty. If a tenant opts to move out before his/her lease term, you as the landlord have to make significant efforts to re-rent the place to mitigate your losses. At best, the tenant will lose 1 month's rent as the penalty.
Somewhat off topic, but I'm curious about this as a renter. A few years ago, my wife and I moved to a DC/NOVA suburb and signed a two-year lease on a house without viewing it first in person. Once we got into the house, we hated it but felt stuck. Our early termination clause said we were liable for the full value of the lease, which was like $70k, minus whatever the owner could re-rent it for. It seemed like it would be very easy for the owner to drag his feet for a few months and then set the asking price too high so that it sat vacant, or rent it for way below market value so we'd still be on the hook for a bunch of money. I know the law requires a reasonable effort by the owner to minimize losses, but how does that really work out? I couldn't stomach the thought of being chased for all that money, plus the cost of a lawyer to take the owner to court, plus the cost of renting a similar place to live while going through this process. Basically it felt we like we shouldered all the risk so we stayed to the end. It was one of the most gut-wrenching experiences of my life.
I personally haven't had to deal with that issue. Longest lease I've done before going month to month is 1 year, and the longest month to month that continued on was for over 10 more years. A good tenant doesn't want to leave a good landlord renting a nice property and doesn't want to go through the hassle of a move. Using a month to month has never implied that I was hoping for a quick turnover, because every landlord knows turnovers are expensive.

On your question though, just think about it from a small claims judge point of view. Do you think a judge (it is general consensus that judges will favor a tenant over landlord if things seem equal) would say, "I am finding in favor of the landlord who was renting the home out for $2,000/month before the lease was broken and then raised it to $3,000/month once the lease was broken so he/she could keep the unit vacant." ???? I suppose if there was a very poor market for new tenants, it might take longer than a month and you could get hit for more than 1 month. However, if you had told the landlord we are going to vacate in 2 months to allow you time to advertise/show the unit (and did so this in writing along with cooperating with prospective tenant showings), I would find it hard to imagine a judge would think it was simply reasonable for a landlord to sit on a property vacant. Regarding re-renting for a lot less, I don't know. Would a judge hold you liable for the full difference for the full 2 years? Maybe, maybe not?? Would you be held liable if the landlord had to evict the follow-up tenant before the 2 yr period? (I'd doubt that). I'm not a judge, so I can't speak with any authority. Maybe someone can chime in on personal experience with this, especially a judge who's dealt with this (Judge Judy feel free to respond). Also, I don't think people are using lawyers in small claims court. Then there is the issue about even if a landlord wins the case, I understand collecting the $$ can be another uphill battle.

Just recently though, I did provide guidance to a friend who needed to break a lease early to purchase a home. Gave him the advice to notify via certified mail about a date he was going to vacate, making sure documentation was done on leaving home in undamaged/clean, advised him he'd likely lose a month of rent which was reasonable, and left him with the thought, "what is the landlord really going to get/win from you if the landlord actually wanted to take the time to go to court?"

Even with your particular case, I still stick to the logic of starting with 6-12 months maximum fixed on lease and then going month to month. If your late with rent and other issues right away, then I'd rather be able to get you out asap without doing an eviction (which may not even be supported legally).

Edit: I should clarify I presume that at best a landlord will likely get only 1 months rent penalty. I do not know that for sure, one could be held liable for more so consult with your own personal attorney and nothing I say should be construed as legal advice, etc. etc.

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