During my many years as a REALTOR®, I’ve worked with tons of people buying a home for the first time and many needing to up size (moving up / needing a larger home and some needing to downsize (buying a smaller home). Every now and then, I, encountered folks that could not be pre-approved for a mortgage at that time. With these individuals, they either had some credit work to do, debt to be cleared up, or they needed to come up with more money. While these situations were disappointing, there was still hope. For these future buyers, they would continue to rent or depending on the situation, I would assist them with renting-to-own.
There is another situation I’ve encountered that is truly disheartening… when someone can’t even get approved for a rental, let alone buying a home. While I primarily work with sellers & buyers; I occasionally work with people needing to rent and I’ve learned a lot and become very effective in helping people secure rental properties. Those that rent by choice (recent transplants and want to decide on location) have a very smooth time finding a home to rent. On the other hand, there are those that need to rent, but can’t get approved. What does one do when you can’t buy a home AND you can’t rent a home?! The down side and first thing to realize is that you’re doing bad . Yes, I said it. In order to change a situation, you first need to acknowledge it and how you got here. The up side and second thing to realize is that things can change if you are serious about improving your situation.
Here are some common reasons why people can’t get approved to rent a property and how to fix it.
Jacked up credit:
–Low score – Every now and then I’ll see the criteria for a rental property read “Must have Good Credit” or “Minimum 620 Credit Score Required”. Heck, the minimum credit score to buy a home is 580! I think this is foolish because the majority of people renting are doing so because they do not have good credit. If they did have good credit, they would be buying a house.
*You’d be surprised by the amount of people that rent and have no idea they can actually be approved to by a home. There have been several clients that initially contacted me about renting a property, but instead were able to purchase a home.
–Late payments – Some may or may not have a specific credit score, but relatively good/responsible recent payment history is ideal. This is what it is. If your credit report shows a history of late or missed payments, why would someone think you will pay the rent on time.
–Judgements and Evictions relating to rental property – This is a big red flag, and often an automatic denial when trying to rent a home. Judgments and evictions relating to rental properties in the past (regardless of the reason) also are lead indicators that you may exhibit this behavior in the future. No landlord wants to willingly sign up for this headache.
–Open bankruptcy – This too is often an automatic denial when trying to rent a property. During open bankruptcy, you can still add accounts to your bankruptcy. A landlord will be concerned that you’ll stop paying and add the debt to your bankruptcy to be discharged. This would be a mess for a landlord to deal with.
Not enough income – Typically, you’ll need to make 3x’s the monthly rent (gross or net may be specified). Example: $2,000 x 3 = $6,000 monthly income. I’ve had people make less than 3x’s and say “I know I can pay the rent”. You may be well intentioned, but when renting property, concrete support beats intentions and promises any day!
Not enough money for deposit and move-in – Once approved, you’ll need the following funds:
1) A Reservation Deposit (a good faith deposit that will be credited). Some companies require this at the time of application. Generally, if not not approved, the reservation deposit is refunded. The application fee is not.
2) Security Deposit (normally 1 month’s rent) and First Month’s Rent due at move-in. If there are credit concerns, 1.5, 2, or even 3 month’s security deposit can be requested.
Unstable or inconsistent employment – Landlords typically want 2 things. A tenant that will take care of the property and a tenant that pays the rent on time, in full. If you can’t show consecutive pay stubs or bank statements showing payroll deposits for the past few months, it’s hard for a landlord to be assured you’ll have the funds to pay.
Undocumented income – If you truly have a legal and legitimate job, you should be able to provide documentation. Even if you don’t receive pay stubs, you should be able to show your bank statements. If neither of those will work, the past 2-3 years of tax returns will speak to your credibility. If you can’t do either of these options, don’t bother applying.
Pets – May or may not be allowed. If allowed, an additional deposit or fee is common. Having pets will limit your rental search option. If you have an issue with any of the areas mentioned above, plus you have a pet, you may have to make a tough call. Give up your pet or sleep on a friend’s couch. *Be sure to ask about or check the “Approved Pet/Breed List” PRIOR to applying. Better yet, check it before you even go view the property.
*Side-note -It gets me every time I speak to someone that wants to rent, is in a low price point, and they have Pit-bulls. You can’t ask for a harder client to work with! In Gwinnett, Georgia and surrounding, there are a lot of subdivision communities. This means they have an HOA. I have NEVER seen a Pitbull on any approved breed list.
There is hope! Pick one of these options and let me help you…
1. If you are currently renting, but want to become a homeowner, contact me for a Get-Buying Ready Consultation.
2. Have you been denied for a rental or know you have to work on your credit? Let’s talk and get a plan of action in place.
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Homeowners/Landlords, do you have a home to rent in or surrounding the Gwinnett, Georgia area? I am the agent for you!
Avoid trying to advertise your property and weed through the applicants by yourself. Hiring me to help you secure a rental will save you a lot of wasted time & aggravation trying to do everything yourself!
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