Quality renters scarce in hard times
Florida’s spiraling cycle of unemployment and heavy debt means more people have bad credit, which South Florida property managers say makes good tenants hard to find. With low-risk renters thin on the ground, landlords are justifying renting to people they wouldn’t have dreamed of giving keys to a few years ago.
“We’re finding that foreclosures are being completely overlooked right now by property managers,” said Michael Internoscia, founder and CEO of Plum Pads, which does tenant placement for developers, investors and apartment complexes.
Internoscia said realistic property managers will not look at a foreclosure too seriously. Many would-be renters have incurred some sort of credit problem over the last 18 months. A recent TransUnion Rental Screening Survey of more than 870 property managers found that 81 percent of them are most concerned with locating reliable renters for the remainder of 2009. While criminal and credit background checks remain important, property managers and owners are also looking at employment histories. Some have even started to request active pay stubs as proof of income.
Tracy White, a property manager at Coldwell Banker’s Kendall office in Miami, said these days record checks come back with more blemishes, but ultimately she leaves it up to the owner whether they want to rent to the prospective tenant. “A foreclosure just means there’s more to consider,” she says.
In the case of a foreclosure, a property manager may require more money up front or they can request a guarantor for the lease.
“I’ve found the most important things are no criminal history, good tenant history and employment history,” Internoscia said. He said people aren’t looking at credit like they used to and that the “greed factor” is still very much alive. “No one will shut the doors on a person because of a foreclosure. I think evictions are looked at as worse than foreclosures, because it’s almost common to see a foreclosure on a person’s record these days.”
Internoscia says Plum Pads, which offers tenant placement services for properties throughout South Florida, Arizona, Baltimore, Connecticut, Houston, Massachusetts and Pennsylvania, is primarily concerned with criminal backgrounds and active pay stubs of at least $3,000 a month. However, others haven’t gone as far as to request pay stubs from prospects.
John Patrick of Cortes Patrick Property Specialists manages about 20 rental units on South Beach. He said he’s gotten by just checking credit scores closely.
“Most of the time the owners just want more money down when there’s a low credit score,” he said. “It’s a case-by-case basis, of course, but if someone has a foreclosure, we’d probably want first and last months’ rent and a security deposit to have as a blanket. People haven’t even been able to honor leases in our vacation rentals, so we’ve had to tighten that up.”