Should I rent to someone w/ bad credit??

[pamelawfemp]

Okay Austin TX- what’s really doing on? A few months ago I bought a home and decided to rent it out. I live in Southern CA so I hired a property management company to find tenants to rent my home. My only stipulation was that I would have to see a copy of each individual’s credit report before I would give the okay to rent.

So far I have seen nothing short of the worst credit imaginable. I’m not talking a couple late payments here- I’m talking about 29 collection accounts and judgments from the past places they have lived. My property manager keeps insisting that people who rent typically have bad credit. I just do not believe this. I live in Marina del Rey CA and my credit is PERFECT. My fiancé also lives with me, and his credit is perfect. Now maybe we’re the exception to the rule and just never realized it.

So what’s the deal? I know there are people with good credit in Austin… should I raise my rent? I’m scared if I lower it, I will attract someone worse. The house is 3 bedrooms, 2.5 bath, 1608 sqft- brand new never been lived in. It has a security system and a gated back yard. It’s 6 miles from the heart of downtown Austin in Sendero Hills (a new development). I was asking 1125/mo if you pay on time- or 1150 if you are late (even one day). Perhaps everyone who applies will have a very similar situation…? I worry that because they are irresponsible with their fiancés, they will be irresponsible for care of my home.

Yesterday a couple applied and they both have ficos in the 500s. They both also have over 10 accounts in collections, most of the utilities (electric, cable, phone service) and the guy owns back child support. They said they are willing to pay first and last months rent upfront.

What are your thoughts?? Would you rent your house to these people?

[wordsmith]

Tons of people do have bad credit, it's naive to think that's not true.

Beyond that, whether or not you rent to them is entirely your judgment call and what you're comfortable with.

[old_school_soul]

Hell fucking no would I rent to anyone with credit like that. Jack your rent up to $1500 and see who yo u pull in.

[wordsmith]

I wonder where people with bad credit should attempt to live?

[old_school_soul]

I wonder where people with bad credit should attempt to live?

In shittier places. Not brand new houses.

[wordsmith]

Oh, my bad. I didn't realize it was a nice house.

[Skyblade]

My bf has horrible credit. I have pretty much perfect credit. Our landlord just asked that we pay a bit more on the deposit.

If you are worried about your place, maybe just ask for more deposit. That way if they don't take care of your place, you'll have the money to make repairs.

[embrassezla]

My mom rents out a house in North Carolina, and she has had the same problem. In her area, you can get a mortgage for around the same as a rent payment, so she also only gets people with poor credit trying to rent her house. She was advised to advertise a slightly higher price than what she hopes to rent for, and then when someone comes to see the house, explain that the rent amount is $X (inflated), but if the rent is paid by the 10th of the month, it's discounted to $Y (price you really want).

[pamelawfemp]

It’s just unfathomable for me to think that people can rack up debts- and then just not pay them! I see a lot of credit challenged people in my field (finance) however- these people look like saints to my current applicants.

I really would love to get the house rented out ASAP. However, if I rent it to these people, and they stop paying it will take me 5 months and a lawyer to get them out. Not to mention the unknown damage they might do to my house.

I think I am going to turn them down. It’s sad- b/c they want to live there- and I want them to live there- but I just can’t trust them. If they had a fico in the 700s I would gladly DROP the rent. Oh well—I guess we both lose!
:mad:

[pamelawfemp]

My mom rents out a house in North Carolina, and she has had the same problem. In her area, you can get a mortgage for around the same as a rent payment, so she also only gets people with poor credit trying to rent her house. She was advised to advertise a slightly higher price than what she hopes to rent for, and then when someone comes to see the house, explain that the rent amount is $X (inflated), but if the rent is paid by the 10th of the month, it's discounted to $Y (price you really want).


Wow- this might be a really good idea! Thanks- I think i will give it a try!

[embrassezla]

Wow- this might be a really good idea! Thanks- I think i will give it a try!
No prob! It's worked out for her. Oh, and you also might want to consider forming a corporation. If you don't, and a tenant sues you, they can go after any of your assets.

She also avoided the cost of looking up credit reports by asking potential tenants: "I'm going to run a credit check. Is there anything I should know before I do?" People usually fess up, so you can make a decision whether it's worth it to run or not.

[analogman]

You've already bought the place so it's too late, but here are my thoughts.

1. House is in a 'less nice' area of Austin (I graduated from UT Austin in 2001, maybe things are different now). That could have something to do with the quality of applicants you are getting.

2. The houses start at 130k, which means you are probably making a profit (mortgage vs. rent) at 1125 a month in rent. I don't think raising it to 1500 is a good idea at all.

I personally wouldn't rent to credit bandits but if that's all you are seeing in terms of applicants you might have no choice. In that case, ask for 2 months rent (first and last) and a large security deposit. Maybe even ask for a right to periodically inspect the premises After all that, people might not want to rent anymore but that's probably what it'd take for me to rent to people with REALLY bad credit.

I am curious, did you know Austin and the area before buying?

[AshleyJordan]

I'd be really, reallly worried about renting to someone like that. I'd do two things if I were to rent to the bad credit people:

require a cosigner
require at least one month's extra deposit

[pamelawfemp]

I hired the management company to defer the liability and handle concerns/issues/problems on my behalf. If I decide to do my own managing I would definitely set up an S-Corp. I am currently being sued now for a car accident that was my fault back in January! In CA everyone is sue happy- maybe that is everywhere now actually- hard to say. Anyhoo- that is great advice for anyone who wishes to shelter themselves from lawsuits!! Right now though- b/c I am not living in TX, Prudential (the management co.) will assume liability.

[pamelawfemp]

I'd be really, reallly worried about renting to someone like that. I'd do two things if I were to rent to the bad credit people:

require a cosigner
require at least one month's extra deposit



I'm thinking because their credit is so incredibly bad, I will require first, last & a hefty security deposit. If they cannot come up w/ the cash- then they’re out of luck. Also, I want to see pay stubs to verify income and employment. Geez- I never thought I would have to do anything like this! I have heard the worst horror stories though… and I need to protect this house- I might have to live in it one day....

[AshleyJordan]

I'm thinking because their credit is so incredibly bad, I will require first, last & a hefty security deposit. If they cannot come up w/ the cash- then they’re out of luck. Also, I want to see pay stubs to verify income and employment. Geez- I never thought I would have to do anything like this! I have heard the worst horror stories though… and I need to protect this house- I might have to live in it one day....


It's obviously your decision, but I'd really urge you to ask for a cosigner as well. That way, if they don't pay, someone else is also on the hook for it. Maybe it's different in TX, but for my first NYC apt., where my rent was more than 30% of my income, my parents had to co-sign, even though, "off the record," they made it very clear to me that they would never help with the rent. No way I would've gotten a decent apt. otherwise, and my credit report is totally unblemished!

[wordsmith]

It’s just unfathomable for me to think that people can rack up debts- and then just not pay them! I see a lot of credit challenged people in my field (finance) however- these people look like saints to my current applicants.

I really would love to get the house rented out ASAP. However, if I rent it to these people, and they stop paying it will take me 5 months and a lawyer to get them out. Not to mention the unknown damage they might do to my house.

I think I am going to turn them down. It’s sad- b/c they want to live there- and I want them to live there- but I just can’t trust them. If they had a fico in the 700s I would gladly DROP the rent. Oh well—I guess we both lose!
:mad:

I'm actually surprised you don't see more people with lousy credit in your line of work. It's pretty widespread...when you can hardly check your e-mail, surf the web, watch tV, or pick up a newspaper without being bombarded by ads for credit counseling services, it's a pretty good indication that it's a widespread problem.

Also, not to be nitpicky, but you're right in that it's a risk that people with touch and go finances might not end up paying/paying on time, etc. and you could take a hit that way, but I'm not sure about bad credit scores/collections being necessarily equivalent to people who will ruin your house. People's finances can get out of hand and snowball, and that doesn't necessarily mean that they're people who are abusive of property.

[pamelawfemp]

You've already bought the place so it's too late, but here are my thoughts.

1. House is in a 'less nice' area of Austin (I graduated from UT Austin in 2001, maybe things are different now). That could have something to do with the quality of applicants you are getting.

2. The houses start at 130k, which means you are probably making a profit (mortgage vs. rent) at 1125 a month in rent. I don't think raising it to 1500 is a good idea at all.

I personally wouldn't rent to credit bandits but if that's all you are seeing in terms of applicants you might have no choice. In that case, ask for 2 months rent (first and last) and a large security deposit. Maybe even ask for a right to periodically inspect the premises After all that, people might not want to rent anymore but that's probably what it'd take for me to rent to people with REALLY bad credit.

I am curious, did you know Austin and the area before buying?


The area of Austin we bought our home in is brand new. It’s very nice, & very close to downtown. All the homes were built in 2006 and it is in the best school district Austin has to offer.

No, I had never been to Austin before- and didn’t know much about it. I have some friends who are real estate investors who also bought on my same street- they are the ones who turned me on to the idea of Austin. In the 3 months we have owned our home it has gone up 30k. I am very happy about that. If you go to cnnmoney.com or just copy this link: http://money.cnn.com/magazines/moneymag/bplive/2006/top100/bigcities.html you will see that Austin is rated #2 best big city to live in the United States. In addition, it is the only market forecasted to go up 5% in the next year- compared to the declines in all other markets.

Never the less- if it wasn’t Austin it would be somewhere else. I wanted to get into the housing market, and cannot afford to do it here in LA. We are not planning to flip our house- but to hold on to it- indefinitely. In the end, real estate will inevitably go up, irregardless of the ups and downs in-between.

[pamelawfemp]

I'm actually surprised you don't see more people with lousy credit in your line of work. It's pretty widespread...when you can hardly check your e-mail, surf the web, watch tV, or pick up a newspaper without being bombarded by ads for credit counseling services, it's a pretty good indication that it's a widespread problem.

Also, not to be nitpicky, but you're right in that it's a risk that people with touch and go finances might not end up paying/paying on time, etc. and you could take a hit that way, but I'm not sure about bad credit scores/collections being necessarily equivalent to people who will ruin your house. People's finances can get out of hand and snowball, and that doesn't necessarily mean that they're people who are abusive of property.


My position at Wells Fargo is to cater to the “upper mass affluent community banking customers.” Basically- my clients are extremely wealthy. I do not have contact with people who just graduated college that have a thousand dollars in their checking account. It’s just not my job- Wells Fargo has other bankers that cater to those type of individuals.

Here is my job description:
Job Description
Manages full-service banking relationships with upper mass affluent community banking customers. Consults with customers regarding financial needs, recommends products and financial services including community banking products plus private banking deposit and consumer credit products. Prepares loan packages for credit review and underwriting, opens and services accounts within authorized limits. Identifies full balance sheet cross-sell opportunities for client and effectively coordinates with partners to evaluate those opportunities. Monitors changing needs and recommends strategies that utilize company products and services. Develops customer base through cross-selling products and servicing current clients. Develops new business through interaction with external resources. Keep informed of changing market conditions in order to properly manage relationships with clients. Note: Must have a working knowledge of consumer deposit and credit products and have an understanding of sophisticated affluent and high net worth clients.
Minimum Qualifications
Qualified candidates MUST have their series 7 and 66 licenses.

[wordsmith]

My position at Wells Fargo is to cater to the “upper mass affluent community banking customers.” Basically- my clients are extremely wealthy. I do not have contact with people who just graduated college that have a thousand dollars in their checking account. It’s just not my job- Wells Fargo has other bankers that cater to those type of individuals. \

Yes, I can see how that might affect your perspective. But, as you're finding, lots and lots of people outside the populationyou work with have crummy finances. And a lot less than a thousand dollars in their checking accounts. In fact, I think you'll find plenty of posters on here who have a lot less than a thousand dollars in their checking accounts.

[Chameleon]

The house is 3 bedrooms, 2.5 bath, 1608 sqft- brand new never been lived in. It has a security system and a gated back yard. It’s 6 miles from the heart of downtown Austin in Sendero Hills (a new development). I was asking 1125/mo if you pay on time- or 1150 if you are late (even one day).


1. House is in a 'less nice' area of Austin (I graduated from UT Austin in 2001, maybe things are different now). That could have something to do with the quality of applicants you are getting.

I agree with analogman's assessment. The property you purchased is about a quartermile from a (hopefully inactive) railroad and way the heck in East Austin, an area of town that City has been trying to gentrify for the last few years. It's not the most affluent area of Austin to put it mildly. A stone's throw form the Travis County Expo Center (location of the annual rodeo), so maybe that's could work in your favor? Most of the hotter properties are closer to I-35. I do know a couple of people that have bought property east of I-35 but I personally wouldn't want to live out there. What you are seeing creditwise would be on par with that area. If you wanted to rent to 'rich' folk, you might have chosen the wrong side of town.

[capella]

My take...

People who are really wealthy or make 76K a year don't tend to have credit problems since they make more than they need to survive. Unless they are just really reckless and live like The Donald or something. That is definitely skewing your perception. The average, common person probably either has trouble making ends meet currently, or they have had trouble in the past. That doesn't make them evil people. We'd all have perfect credit if we made lots of money. I don't see how it's unfathomable that people have debts they can't pay. I'm not saying it's good or right, but that it's pretty commonplace.

Second, I wouldn't rent to someone with a FICO in the 500s. I would like to see 650 or better.

Third, you can buy a house in Austin for $1125 a month. That's *most likely* why you're seeing such poor credit in your applicants. These are the people who couldn't finance a house on their own.

Last, why don't you just move to Texas then? You say you want to teach... we'll you'd at least make good money there. And it's affordable. I think you're very naive. I am not saying that to be a bitch either. I just think you might want to take things a little more slowly and really research it before jumping head in.

[embrassezla]

My mom changed her perspective on the "kind of" person that would have horrible credit when a minister applied to rent her house and had a bankruptcy filing on his credit report.

[wordsmith]

The average, common person probably either has trouble making ends meet currently, or they have had trouble in the past. That doesn't make them evil people. We'd all have perfect credit if we made lots of money. I don't see how it's unfathomable that people have debts they can't pay. I'm not saying it's good or right, but that it's pretty commonplace.

Yup, decidedly not good, definitely sad, but above all, it IS reality.

And it does bother me a bit that the assumption is that people with debt problems are a "certain type" of person, and that certain type of person is the sort of person who will trash a house. I don't think that's accurate. I went to college with plenty of well-heeled rich kids who did their fair share of apartment trashing.

My mom changed her perspective on the "kind of" person that would have horrible credit when a minister applied to rent her house and had a bankruptcy filing on his credit report.

Knowing what ministers make where I live and at the church I worked for, I'm less than stunned.

I'd have to look it up, but I believe a pretty decent chunk of senators and congressmen have shit credit (unsuprising, since running for office ain't cheap).

[AshleyJordan]

In my experience, there's less and less of a correlation between income and credit. My ex made more than twice as much as I did, but was always in arrears on his rent and couldn't even get a credit card because he had missed so many "minimum monthly payments," and he owed the IRS back taxes.
Meanwhile, I was making a criminally low salary and was sure to pay my bills on time-- now I've been offered huge mortgages, discounted rent from LLs, and generous credit lines. Obviously if you have no money, you're likely to be late on your bills just because you are broke. For a few people I know, it's just irresponsibility.

[Kitty]

I think this is a common problem. I have outstanding credit and when I was applying to apartments, people were really eager to have me move in. I turned this one lady down (the lcoation wasn't right) and she actually offered to lower the rent because she wanted to rent to someone with good credit.

[capella]

In my experience, there's less and less of a correlation between income and credit. My ex made more than twice as much as I did, but was always in arrears on his rent and couldn't even get a credit card because he had missed so many "minimum monthly payments," and he owed the IRS back taxes.
Meanwhile, I was making a criminally low salary and was sure to pay my bills on time-- now I've been offered huge mortgages, discounted rent from LLs, and generous credit lines. Obviously if you have no money, you're likely to be late on your bills just because you are broke. For a few people I know, it's just irresponsibility.
I think it's more often irresponsibility when you're making enough to make ends meet. For most people, I doubt that is the case. I think there is a correlation between making less money and having worse credit.

[wordsmith]

In my experience, there's less and less of a correlation between income and credit. My ex made more than twice as much as I did, but was always in arrears on his rent and couldn't even get a credit card because he had missed so many "minimum monthly payments," and he owed the IRS back taxes.
Meanwhile, I was making a criminally low salary and was sure to pay my bills on time-- now I've been offered huge mortgages, discounted rent from LLs, and generous credit lines. Obviously if you have no money, you're likely to be late on your bills just because you are broke. For a few people I know, it's just irresponsibility.

I think the correlation is most strong between low income and having poor credit.

I know people where it's an issue of low income, so they let bills go over due while they save up to pay them and it snowballs from there, you can't catch up, it's just a neverending cycle of robbing peter to pay paul.

I know people where it's an issue of having a modest income (and therefore modest insurance) and being hit by major catastrophic costs, and never being able to dig out from those big hits and it snowballing. (This is true of my family, who will never recover financially from injuries my father sustained at work/in an accident).

I know people where they can attribute it to really irresponsible spending habits that get them in over their head...but they're more rare than the above. Most people I know who struggle are not spendthrifts.

[wordsmith]

Cross post, Amy.

[capella]

Cross post, Amy.
LOL. Oh well. Great minds....

[redav]

I think the correlation is most strong between low income and having poor credit.

I know people where it's an issue of low income, so they let bills go over due while they save up to pay them and it snowballs from there, you can't catch up, it's just a neverending cycle of robbing peter to pay paul.

I know people where it's an issue of having a modest income (and therefore modest insurance) and being hit by major catastrophic costs, and never being able to dig out from those big hits and it snowballing. (This is true of my family, who will never recover financially from injuries my father sustained at work/in an accident).

I know people where they can attribute it to really irresponsible spending habits that get them in over their head...but they're more rare than the above. Most people I know who struggle are not spendthrifts.

There is a correlation between income & credit score for people with low-income. At some point (I don't know exactly where) the trend stops and credit score becomes independent of income. I believe most people fall into second region. That's the primary reason that insurance companies have been able to use credit score in setting premiums. If credit scores did track income for the majority of the population, it would be easy to demonstrate the insurance companies' policies are discriminatory.

[pamelawfemp]

My take...

People who are really wealthy or make 76K a year don't tend to have credit problems since they make more than they need to survive. Unless they are just really reckless and live like The Donald or something. That is definitely skewing your perception. The average, common person probably either has trouble making ends meet currently, or they have had trouble in the past. That doesn't make them evil people. We'd all have perfect credit if we made lots of money. I don't see how it's unfathomable that people have debts they can't pay. I'm not saying it's good or right, but that it's pretty commonplace.

Second, I wouldn't rent to someone with a FICO in the 500s. I would like to see 650 or better.

Third, you can buy a house in Austin for $1125 a month. That's *most likely* why you're seeing such poor credit in your applicants. These are the people who couldn't finance a house on their own.

Last, why don't you just move to Texas then? You say you want to teach... we'll you'd at least make good money there. And it's affordable. I think you're very naive. I am not saying that to be a bitch either. I just think you might want to take things a little more slowly and really research it before jumping head in.


LOL- I don’t want to rent to someone “rich” per say (hey- but wouldn’t that be nice). Just someone responsible- rich or poor. We bought in East Austin b/c we feel that someday it will be fully developed and a nice place to live. It is close to the I-35 and very close to downtown. The property has appreciated at an incredible rate for only 3 months- so we’re very fortunate for that.

Someone else mentioned posters not having a thousand dollars in their checking account… I’m not really sure what that was in reference to… Whether or not people in Austin, East Austin or posters on the web have $ in their accounts is irrelevant to me. Because I do deal with rich people as a part of my job- doesn’t mean that I am looking for one to rent my house…

Furthermore, I was very insulted to read what Capella had to write. I am staying in CA to be close to my family- something more important to me than my career. My parents are here, my fiancé’s parents are here, and I have grandparents here in very poor health. We purchased the home in Austin for 2 reasons: 1. tax write off that we desperately need (it is financed as a vacation home), 2. because we feel that in the long run the property will be worth more than we purchased it for.

76K might be a lot for you- but you do no live where I live. Cost of living is a lot higher in LA than any other part of the country (well.. besides NY). In addition- I earn this money- it doesn’t just fall into my lap every month. I had to go to college, I had to get a series 7 license, I had to get a series 66 license. A huge portion of my income goes into a retirement account—I’m not just rolling in the dough sweetie.

Lastly, there will always be renters in this world. People who don’t want to buy b/c they are not going to stay in that market/state for a long period of time, or because they have other goals entirely. Who said anyone who had bad credit was evil? Please re-read my comments. I said I was worried if they were not making their utility payments, they might also not pay me. I never said they were “evil.” I think it is “unfathomable” that people open accounts such as utilities and then decide not to pay them. These particular individuals do have $, some of their’ accounts are in collection are less than $100.

I really don’t think name calling is an appropriate way to disagree or share your opinion.

[analogman]

We purchased the home in Austin for 2 reasons: 1. tax write off that we desperately need (it is financed as a vacation home), 2. because we feel that in the long run the property will be worth more than we purchased it for.


Make sure you don't get caught for tax evasion. You are renting it out which makes it not a vacation home.

You are going to be able to deduct it, but from rent. Saying you bought the place to get some tax deduction doesn't really make sense. You probably already know all this though as a premier banker :)

[capella]

LOL- I don’t want to rent to someone “rich” per say (hey- but wouldn’t that be nice). Just someone responsible- rich or poor. We bought in East Austin b/c we feel that someday it will be fully developed and a nice place to live. It is close to the I-35 and very close to downtown. The property has appreciated at an incredible rate for only 3 months- so we’re very fortunate for that.

Someone else mentioned posters not having a thousand dollars in their checking account… I’m not really sure what that was in reference to… Whether or not people in Austin, East Austin or posters on the web have $ in their accounts is irrelevant to me. Because I do deal with rich people as a part of my job- doesn’t mean that I am looking for one to rent my house…

Furthermore, I was very insulted to read what Capella had to write. I am staying in CA to be close to my family- something more important to me than my career. My parents are here, my fiancé’s parents are here, and I have grandparents here in very poor health. We purchased the home in Austin for 2 reasons: 1. tax write off that we desperately need (it is financed as a vacation home), 2. because we feel that in the long run the property will be worth more than we purchased it for.

76K might be a lot for you- but you do no live where I live. Cost of living is a lot higher in LA than any other part of the country (well.. besides NY). In addition- I earn this money- it doesn’t just fall into my lap every month. I had to go to college, I had to get a series 7 license, I had to get a series 66 license. A huge portion of my income goes into a retirement account—I’m not just rolling in the dough sweetie.

Lastly, there will always be renters in this world. People who don’t want to buy b/c they are not going to stay in that market/state for a long period of time, or because they have other goals entirely. Who said anyone who had bad credit was evil? Please re-read my comments. I said I was worried if they were not making their utility payments, they might also not pay me. I never said they were “evil.” I think it is “unfathomable” that people open accounts such as utilities and then decide not to pay them. These particular individuals do have $, some of their’ accounts are in collection are less than $100.

I really don’t think name calling is an appropriate way to disagree or share your opinion.
Saying I think you're naive is not name calling. I'm sorry you felt insulted, but sometimes it's good to get an outside perspective. Most people would not be so honest with you. And keep in mind this is a messageboard and I can only go off of what you're posting. But it seems to me that there is a lack of maturity guiding your decisions.

[EmberMae]

I would not do it. Eviction is a huge pain in the ass. When my grandfather died, they tried to rent the house and ended up with several different deadbeats. At least one if not two didn't pay rent for months at a time, but it took awhile to get through the eviction process. Maybe it's something about renting houses that attract people like that because it's much harder to take advantage of the huge conglomerates who own apt. complexes and are more efficient about throwing people out who don't pay.

I've never made more than 20k in a year and my FICO score was in the 700s last time I checked. Meanwhile my future in laws make over $120k a year and their credit sucks. Good credit isn't just about income. However, regardless of whether the people aren't paying because they are irresponsible or because they can't afford to pay, you don't want them living in your house if they aren't paying rent.

Now I'm just wondering why more apartment places aren't begging me to go live there and why my complex offered me no incentives to renew my lease. Hmmm...
They have some REALLY strict policies here though. They throw out some bogus "market rent" rate and heavily discount off that, no one pays the "market rate" though. but if you are even a day late, you have to pay the "market rate" PLUS a $50 late charge. On my unit that amounts to over $300 extra. Further if you break your lease you have to pay back all the "concessions" from the part of the lease you already used, so $250 for every month.

[pamelawfemp]

Make sure you don't get caught for tax evasion. You are renting it out which makes it not a vacation home.

You are going to be able to deduct it, but from rent. Saying you bought the place to get some tax deduction doesn't really make sense. You probably already know all this though as a premier banker :)


I'll do my best not to get caught ; )

[pamelawfemp]

I would not do it. Eviction is a huge pain in the ass. When my grandfather died, they tried to rent the house and ended up with several different deadbeats. At least one if not two didn't pay rent for months at a time, but it took awhile to get through the eviction process. Maybe it's something about renting houses that attract people like that because it's much harder to take advantage of the huge conglomerates who own apt. complexes and are more efficient about throwing people out who don't pay.

I've never made more than 20k in a year and my FICO score was in the 700s last time I checked. Meanwhile my future in laws make over $120k a year and their credit sucks. Good credit isn't just about income. However, regardless of whether the people aren't paying because they are irresponsible or because they can't afford to pay, you don't want them living in your house if they aren't paying rent.

Now I'm just wondering why more apartment places aren't begging me to go live there and why my complex offered me no incentives to renew my lease. Hmmm...
They have some REALLY strict policies here though. They throw out some bogus "market rent" rate and heavily discount off that, no one pays the "market rate" though. but if you are even a day late, you have to pay the "market rate" PLUS a $50 late charge. On my unit that amounts to over $300 extra. Further if you break your lease you have to pay back all the "concessions" from the part of the lease you already used, so $250 for every month.



Any interest in moving to Austin TX? If you do have a 700 fico I will rent it to you for a great price!!!!!!!!!!!!

[Chameleon]

The area of Austin we bought our home in is brand new. It’s very nice, & very close to downtown. All the homes were built in 2006 and it is in the best school district Austin has to offer.
This statement has been bugging me. The closest high school in the Austin Independent School District (AISD) to your location is Lydon Bird Johnson (http://skyrealtyaustin.com/default.asp?f=search_school_details&d=schools&schoolid=79777&district=AUSTIN%20ISD,%20MANOR%20ISD&statename=TEXAS&zipcode=). The Sendero Hills website says children that live there will be sent to Manor ISD (http://skyrealtyaustin.com/default.asp?f=search_school_details&d=schools&schoolid=84226&district=AUSTIN%20ISD,%20MANOR%20ISD&statename=TEXAS&zipcode=) which I seriously doubt is better than Austin ISD.

All the answers to the question on the safest place and best schools in Austin onYahoo Answers! (http://answers.yahoo.com/question/index?qid=20061028041512AAA0xBF) did not make a mention of living in East Austin.

The real estate market is still doing well and I hope you make a tidy profit, just have realistic expectations about people who would want to live in East Austin.

[AshleyJordan]

I think it's a little hypocritical that you're talking about how a lot of people with bad credit are irresponsible, but then in the next breath imply it's OK to cheat the system like this with your illegitimate mortgage write-offs that you "desperately need."

[pamelawfemp]

Saying I think you're naive is not name calling. I'm sorry you felt insulted, but sometimes it's good to get an outside perspective. Most people would not be so honest with you. And keep in mind this is a messageboard and I can only go off of what you're posting. But it seems to me that there is a lack of maturity guiding your decisions.


Oh geez, I thought this was going to be a nice message! “Lack of maturity guiding my decisions?” Would that be not moving to Austin and becoming a school teacher b/c I want to stay close to my family? Or perhaps considering a career change b/c of lack of fulfillment?

I realize that this is a message board- and you only can go off what is written. Yes I was insulted by your comment, but like you said- I do appreciate your honesty. I find your comments to be very thoughtful, and I do appreciate your advice even if some of it does hurt my feelings. I guess it can be difficult communicating everything through blogging on the internet. Thank you for your input though, I do sincerely appreciate it.

[analogman]

This statement has been bugging me. The closest high school in the Austin Independent School District (AISD) to your location is Lydon Bird Johnson (http://skyrealtyaustin.com/default.asp?f=search_school_details&d=schools&schoolid=79777&district=AUSTIN%20ISD,%20MANOR%20ISD&statename=TEXAS&zipcode=). The Sendero Hills website says children that live there will be sent to Manor ISD (http://skyrealtyaustin.com/default.asp?f=search_school_details&d=schools&schoolid=84226&district=AUSTIN%20ISD,%20MANOR%20ISD&statename=TEXAS&zipcode=) which I seriously doubt is better than Austin ISD.

All the answers to the question on the safest place and best schools in Austin onYahoo Answers! (http://answers.yahoo.com/question/index?qid=20061028041512AAA0xBF) did not make a mention of living in East Austin.

I agree. I didn't say anything but assumed that she was fed a bunch of bogus information by the sales office (God knows people in the sales office for our townhouse lied to us too). It's too late to do anything though.

Chameleon, are you currently living in Austin? Which part?

[capella]

Oh geez, I thought this was going to be a nice message! “Lack of maturity guiding my decisions?” Would that be not moving to Austin and becoming a school teacher b/c I want to stay close to my family? Or perhaps considering a career change b/c of lack of fulfillment?

Neither of those things. First, it doesn't seem to me that you've really done your homework on investments or career changes. There is nothing wrong at all with wanting to stay near family. But it seems that you haven't really investigated the area you bought your house in, the financial implications of owning an investment property, or your likely renter demographics. That seems a bit risky and ill-planned. That is just my opinion though.

Second, I think you're really blowing off what people have said about the teaching profession. There are other ways to be fullfilled. You haven't researched the field of education at all, but you think you want to be a teacher? Do you know what NCLB is and its ramifications on your future job? I don't think you know what you're getting yourself into and I think you are so infatuated with the idea that you don't care right now. I wouldn't make that leap of faith and expect it to turn out well.

Then you say you want to have children so you won't have to work? That is one of the worst reasons I can think of to have a child.

You are 24 years old. You've got a lot of life ahead of you. I would be more careful about making life altering decisions on a whim.

Again, I am just basing this on my perception of what you've written. I don't know you from jack and I could be wrong. So take it for what it's worth.

[Chameleon]

Chameleon, are you currently living in Austin? Which part?
I bought a house in South Austin earlier in the year (S. 1st and William Cannon-ish) and was fed my fair share of bull by my realtor now ex-friend (Sure, the tracks are half a mile from your place but you NEVER hear the train blowing its whistle at 2 am in the morning and yes, replacing the siding on the house and all the other repairs on the house shouldn't cost much. Right...). Supposedly my zipcode is the new 78704 or that's what the realtors would like us to believe. Buying in East Austin was never a consideration for me though I know a single lady my age that bought a newly gutted and remodelled house in East Austin (though she had a lot of trouble getting it to pass inspection), not as far out as Sendero Hills though.

I know I'm not in a great school district (but yay for low property taxes!) so I now know I might have some trouble selling my place when the time comes. It's 15 minutes from my work and 15 minutes from downtown.

[pamelawfemp]

This statement has been bugging me. The closest high school in the Austin Independent School District (AISD) to your location is Lydon Bird Johnson (http://skyrealtyaustin.com/default.asp?f=search_school_details&d=schools&schoolid=79777&district=AUSTIN%20ISD,%20MANOR%20ISD&statename=TEXAS&zipcode=). The Sendero Hills website says children that live there will be sent to Manor ISD (http://skyrealtyaustin.com/default.asp?f=search_school_details&d=schools&schoolid=84226&district=AUSTIN%20ISD,%20MANOR%20ISD&statename=TEXAS&zipcode=) which I seriously doubt is better than Austin ISD.

All the answers to the question on the safest place and best schools in Austin onYahoo Answers! (http://answers.yahoo.com/question/index?qid=20061028041512AAA0xBF) did not make a mention of living in East Austin.

The real estate market is still doing well and I hope you make a tidy profit, just have realistic expectations about people who would want to live in East Austin.


Manor school district IS the school district they would be sent to. It's in my purchase agreement.

Yes, you are right- I'm sure the renter I end up w/ will not be everything I hoped for- but I'm sure in the end it will somehow all work out.

[pamelawfemp]

I bought a house in South Austin earlier in the year (S. 1st and William Cannon-ish) and was fed my fair share of bull by my realtor now ex-friend (Sure, the tracks are half a mile from your place but you NEVER hear the train blowing its whistle at 2 am in the morning and yes, replacing the siding on the house and all the other repairs on the house shouldn't cost much. Right...). Supposedly my zipcode is the new 78704 or that's what the realtors would like us to believe. Buying in East Austin was never a consideration for me though I know a single lady my age that bought a newly gutted and remodelled house in East Austin (though she had a lot of trouble getting it to pass inspection), not as far out as Sendero Hills though.

I know I'm not in a great school district (but yay for low property taxes!) so I now know I might have some trouble selling my place when the time comes. It's 15 minutes from my work and 15 minutes from downtown.

My house is brand new- so hopefully I won’t have to do much fixing up… well for the first few years at least. Hang in there- Austin is growing like crazy (read the articles about in on cnnmoney), I’m sure if you wait a few years- everything will be just fine. Just out or curiosity is your realtor named Perry? The schools in Austin a very bad… no way around that- but who knows what the next couple of years will bring. Hopefully it can only get better from here! ; ) Sendro is just a HUGE housing track that is being put in, I bought in the first phase, but there are more to come. I think in about 3 years it will be a very nice place to live.

(any yes the taxes are so GREAT! So much better than CA- I wouldn't be able to afford the tax on a house here!)

[workaholic?]

i hate to tell you this, but manor isd is not really better than austin isd...try looking them up and comparing some of the schools in each on greatschools.net.

[Chameleon]

I'm not really worried about my place right now, had some growing pains but 2007 is going to be awesome :) And no, my realtor wasn't named Perry. I lovingly refer to him as That Bastard (not his given name).

I just talked to some of my co-workers for a reality check and I think you might have been misled. I used to work 3 minutes from Sendero Hills when I moved here 6 years ago and NO-ONE I worked with lived in the area. One quipped, "You COULD live there, if you slept with a gun". My co-worker who has kids said he sometimes has to take his kids out to Manor for soccer games and it's mostly cow fields out there and he recalled going to Johnson for a baseball game at 8am and hearing gunshots.

The police are trying to make the area closer to I-35 safer for the new residents but I don't think you can have that protection that far out. You usually don't live in Manor/East Austin if you have a choice, though there are people buying houses and risking it. There is a new highway that goes through there so maybe there will be good things happening there. However, people who don't like Austin ISD move to Round Rock or Pfluggerville, not Manor. I don't know if a community full of renters necessarily raises your property values either.

I do hope it all works out though.

[pamelawfemp]

Neither of those things. First, it doesn't seem to me that you've really done your homework on investments or career changes. There is nothing wrong at all with wanting to stay near family. But it seems that you haven't really investigated the area you bought your house in, the financial implications of owning an investment property, or your likely renter demographics. That seems a bit risky and ill-planned. That is just my opinion though.

Second, I think you're really blowing off what people have said about the teaching profession. There are other ways to be fullfilled. You haven't researched the field of education at all, but you think you want to be a teacher? Do you know what NCLB is and its ramifications on your future job? I don't think you know what you're getting yourself into and I think you are so infatuated with the idea that you don't care right now. I wouldn't make that leap of faith and expect it to turn out well.

Then you say you want to have children so you won't have to work? That is one of the worst reasons I can think of to have a child.

You are 24 years old. You've got a lot of life ahead of you. I would be more careful about making life altering decisions on a whim.

Again, I am just basing this on my perception of what you've written. I don't know you from jack and I could be wrong. So take it for what it's worth.



Easy, easy- first of all, what the heck do you think I do for living…?! My job is to give people who make millions of dollars financial advice! I’m not just some goofball who runs around buying real-estate all over the country just for fun.

I was simply “talking” about a career change. I have not done anything yet. To be honest, I cannot afford to take a 40k + salary cut at the moment. As far as buying a home in Austin, you’re right. I didn’t do a lot of the leg work on that one. My clients invested in the area, and there was an opportunity for me to buy into and I did. I’ve already made 30k, so I think I’m doing okay. The people that I am working with are the best of the best- I wouldn’t throw a hundred thousand dollars on something that I wasn’t 100% sure about. I have invested my retirement portfolio due to advice from some of these investors- and am doing very well in that respect as well.

I am not blowing off what other people have said about their careers in teaching at all. I find everyone’s opinions very valuable given that they are in the field I would like to transfer into someday. If I did one day become a teacher and didn’t like it- I would leave the profession. It’s not like I am signing a lifetime contract. If I left Wells I would I could come back anytime I’d like. No I have not read about the “NCLB and it’s ramifications on my future job” and if I do decide to make a career change, I will definitely read about it before I do.

I would never have a child just to stop working. I can stop working at any time- and do that without having a child (of course that would be horrible financial decision at this point). I believe I cleared that up in a previous blog. My fiancé and I agreed I would stop working once I gave birth- we are planning on getting pregnant around March or April (obviously nature would have to comply for this to be possible). Right now, I am psychologically in a bad spot at work. I said in a previous blog I was fantasying about ways to get out of work (ie calling in sick, making up a fake appointment, having a child)- I would not ACTUALLY do these things.. I was just explaining my irrational thoughts due to my current state depression about my job.

I am young- and you’re 100% right, I do have a lot of life ahead of me. I can assure you that I am not going to quit my job on a whim and become a school teacher. Like I mentioned in a previous blog- I am looking at things through “grass is greener” lenses. EVERY job looks good to me write now and I do desire to do something more fulfilling. However, I would never jeopardize my current financial goals etc, just b/c I was feeling blue.

I mean this from the bottom of my heart, I do thank you for your opinion, and I do value it. I will take into account everything you have said about your career and the daily problems that you face. It has had an impact on what I think about the position—and I will be sure to do some thorough homework before making any kind of career move.

[pamelawfemp]

I'm not really worried about my place right now, had some growing pains but 2007 is going to be awesome :) And no, my realtor wasn't named Perry. I lovingly refer to him as That Bastard (not his given name).

I just talked to some of my co-workers for a reality check and I think you might have been misled. I used to work 3 minutes from Sendero Hills when I moved here 6 years ago and NO-ONE I worked with lived in the area. One quipped, "You COULD live there, if you slept with a gun". My co-worker who has kids said he sometimes has to take his kids out to Manor for soccer games and it's mostly cow fields out there and he recalled going to Johnson for a baseball game at 8am and hearing gunshots.

The police are trying to make the area closer to I-35 safer for the new residents but I don't think you can have that protection that far out. You usually don't live in Manor/East Austin if you have a choice, though there are people buying houses and risking it. There is a new highway that goes through there so maybe there will be good things happening there. However, people who don't like Austin ISD move to Round Rock or Pfluggerville, not Manor. I don't know if a community full of renters necessarily raises your property values either.

I do hope it all works out though.

Oh I think it will end up being just fine. Can't believe they are selling things in that area with all that gun fire! YIKES. I have some friends in Round Rock- we thought about buying one up there too sometime in the near future... but we'll see how things look in the next 6 months first.

[pamelawfemp]

i hate to tell you this, but manor isd is not really better than austin isd...try looking them up and comparing some of the schools in each on greatschools.net.


As far as my understanding goes- all the schools in Austin are pretty bad. I looked at the test scores... very low. Hope things turn around for Austin someday!

[Chameleon]

As far as my understanding goes- all the schools in Austin are pretty bad. I looked at the test scores... very low. Hope things turn around for Austin someday!
Where did you see these scores?

[pamelawfemp]

Where did you see these scores?

Several websites… hold on I will google it.

http://money.cnn.com/magazines/moneymag/bplive/2006/snapshots/PL4805000.html

summation:

Education
City stats Best places average
Colleges, universities and
professional schools 9 8
Junior colleges and
technical institutes 5 0
Test scores reading
(% +/- state average) -2.3% 13.3%
Test scores math
(% +/- state average) -4.0% 16.9%
% students attending
public/private schools 92.6/7.40 88.4/11.59

[Chameleon]

Several websites… hold on I will google it.

http://money.cnn.com/magazines/moneymag/bplive/2006/snapshots/PL4805000.html


Interesting, given the numbers they posted, I'm not sure I understand what gave Austin the #2 ranking. I know I don't plan on leaving anytime soon though. Round Rock did do much better than Austin on the test score front.

[workaholic?]

Several websites… hold on I will google it.

http://money.cnn.com/magazines/moneymag/bplive/2006/snapshots/PL4805000.html

summation:

Education
City stats Best places average
Colleges, universities and
professional schools 9 8
Junior colleges and
technical institutes 5 0
Test scores reading
(% +/- state average) -2.3% 13.3%
Test scores math
(% +/- state average) -4.0% 16.9%
% students attending
public/private schools 92.6/7.40 88.4/11.59


that's great and all...but do you have these same results for Manor?

[pamelawfemp]

This is Austin across the board, Manors results are part of the copulation.

[capella]

Go to www.greatschools.net. Look at test score results, % of first year teachers, and the "economically disadvantaged" percentages. That will tell you a lot. Districts vary widely when it comes to quality.

[workaholic?]

This is Austin across the board, Manors results are part of the copulation.

really? manor is a separate town...the site didn't say anything about including outlying areas.

[pamelawfemp]

Interesting, given the numbers they posted, I'm not sure I understand what gave Austin the #2 ranking. I know I don't plan on leaving anytime soon though. Round Rock did do much better than Austin on the test score front.


To find that out you’d have to find out what criteria CNNMONEY used to rate their cities. It probably weighted affordable housing more heavily than test scores.

[pamelawfemp]

really? manor is a separate town...the site didn't say anything about including outlying areas.


You are 100% correct! My mistake!

[nikorock28]

I'll do my best not to get caught ; )

Hrmm, I am no premier banker and I don't have a PERFECT credit score, but how is it a tax deduction when the interest on your "next to nothing" mortgage (as you stated in your other post) must be way less than the 1125 in rent? So, you are going to accept rental income and not claim it on your taxes? Hrmmmm......

[asm198]

Just because someone has bad credit doesn't mean they are going to destroy a rental home or won't pay you on time. It's so much easier to destroy your credit than it is to rebuild it. I got into a mess when I was 22 and ruined what was a perfect credit score. Before then, I had never paid a single bill late, not even one day late. For the past two years, I've actively tried to clean up my train wreck of a credit report and start rebuilding. It's next to impossible to do so.

So, as far as someone having bad credit automatically being a person who would trash your house, that's not always true. My parents owned three rental homes when I was growing up. I spent more summers that I cared to cleaning up after bullshit tenants. Several had VERY good jobs, btw. We found that it didn't really matter if the people worked fancy jobs or were hourly employees; both could trash a house.

The advice that I gave my mom when she was trying to rent the last house we have was to get references and a credit check and basically get a feel for who they are, but don't rely on just one thing to make your decision. Being a landlord is a risk, no matter how careful you are with making your decisions.

[SpaceMonkey]

76K might be a lot for you- but you do no live where I live....A huge portion of my income goes into a retirement account—I’m not just rolling in the dough sweetie.

Putting "a huge portion" of your income into a retirement account is a choice, and it's a luxury that not many people here have. Writing that we don't know how hard it is to live on $76K in California, because you're saving so much of your money for retirement, strikes me as a little insensitive.

But, yeah, I wouldn't rent to people with those kinds of credit problems without a co-signer. And check the co-signers' credit, and get both the lease and the co-signing agreement looked at by a lawyer and notarized. So many landlords don't, and it makes it that much more difficult to actually extract money from the co-signer. The co-signing agreement that my parents signed for me so that I could rent the place I am living in now, for example, is probably not legally enforcable.

[anais1]

Just because someone has less than stellar credit doesn't make them a deadbeat...

I was denied an aparatment because I had one collection account on my report. I had no idea it was there and it was only around $400. The manager basically was a jerk to me and said they have "higher standards" and even if I were to pay it I would still be denied. I was so upset by this. ONE thing on my report kept me from getting a great apartment. I pay all my bills on time and even though I don't make a lot of money, paying my bills is a priority

A lot of people have things beyond their control (medical bills come to mind..)that may set them back, and the way the FICO is set up, you are penalized for paying old debts.

Anyway, Good luck with whatever you chose. Most people with great credit that can afford that amount in rent are going to opt to own.

[awhitmer83]

I'd just like to echo the posters who have said that credit score isn't everything.

My husband and I have horrible credit right now, considering that we just filed Chapter 7 in September. However, we rented a house for nearly 3 years, never once paid late, and did things to improve it. We've had a mortgage for 3 years and have never been late, nor was it included in the bankruptcy. Most people consider the roof over their heads to be their #1 financial priority. Of course, there are always those who don't. If the person's credit is bad but they always paid rent on time before, don't count them out.