Does collateral change renter qualifications?

July 13, 2022 10:18 AM

I have mediocre to poor credit, but also own a house. I will however need to rent an apartment in another location, without selling the house. Will the fact that I have very good collateral (and they could lien my property if I didn't pay) make landlords more willing to take me? If not are there other things I could do in the short term?

As per my last question, still owning the house and renting elsewhere. FICO 8 is 610, which I understand is considered "fair" but in reality bad for renting. The house is valued far higher than the current mortgage amount, which I can document. I feel like in human logic, this would make me a good risk because there's equity and they could lien it, but I'm not sure if in landlord logic this will be irrelevant or worse because they know I always have a home?

Would appreciate any thoughts or suggestions.

posted by sockmeamadeus to Home & Garden (8 answers total)

Landlords don't want to deal with that kind of complication. Your credit score means more. A Mom and Pop type rental may be more likely to rent to you than a large complex.
Having a co-signor is maybe the best answer here.
posted by mmf at 10:34 AM on July 13, 2022 [3 favorites]

Depends on where the rental would be. But, in many places, rentals are hard to come by, and think you will have trouble with landlords who don’t want to be bothered by “circumstances” such as yours. Good luck!
posted by Windopaene at 10:43 AM on July 13, 2022 [1 favorite]

I don't think it would help. If you're willing to live with a roommate, that might be easier than trying to rent something yourself.
posted by pinochiette at 10:56 AM on July 13, 2022

I just spent 6 months searching for an apartment for my mother. Inventory is so very very low. When we found a place, no evictions/bankruptcies + proof of good income outweighed a credit score in the 600s for a small corporate-owned complex in NJ. Agree that a mom & pop might be more open to your circumstances, but I've never seen any kind of collateral considered in a lease (only in loans, IMHO). For any place you are considering, I would call and ask before applying - tell them a quick summary of your situation: "Credit score is X, income is Y, looking to move on [DATE] is that an immediate decline for you?"

Absolutely, consider a roommate.
If you pursue a rental for yourself, save money for a down payment and have it ready to go.
If you have means beyond that I would look at raising your credit score.
posted by jennypower at 11:04 AM on July 13, 2022

So the house may well have the opposite effect because you have to pay the mortgage in addition to any rent. So you’ll need to show you have enough income to do both.

As to using the house as collateral, the mortgage is already secured on the house. That means that the mortgage lender gets money from a forced sale long before a landlord would. And they couldn’t do anything at all without the lender.
posted by koahiatamadl at 1:08 PM on July 13, 2022 [3 favorites]

My ex needed an apartment in SF. He has no official job, due to starting his own business. Landlords raised one problem after another with his applications, despite his having considerable liquid savings in hand. He was able to literally pay a year's rent up front, but no matter. Once I submitted to a credit check and co-signed a lease, all those weird problems disappeared and he was able to pick up keys and move in. Look into a co-signer.
posted by They sucked his brains out! at 4:41 PM on July 13, 2022

In February, I couldn't do it without a cosigner and I had to beg several places to let me use a cosigner. I was also offering to pay four months up-front, which they also would not take.

I live in a college town with an incredibly "hot" market. If the market were less hot it would have been easier to find someone to jump at the four months rent on signing. I also didn't try offering collateral, but I'm 100% sure no complexes would have gone for that. For one thing, collecting would be work for them and they want to avoid that (plus if something went haywire they'd have to evict you).

None of this is "right", but it's how they think.

You will have *much* better luck with individuals, as noted above. If you need something truly short-term, some air bnbs will negotiate a monthly rate that is fairly comparable to apartments (a little higher, but not by much, depending on the market).
posted by liminal_shadows at 10:20 PM on July 13, 2022

If you don’t have a willing co-signer, in some cities you can use a guarantor service. Insurent is a popular one in NYC. But not all landlords or management companies accept it so your options may be limited even if the service is available in your desired area.
posted by lovelygirl at 9:41 AM on July 14, 2022