Has anybody experience/hear a tenant willing to pay 1 year rent in advance?

S

Shamu_IHB

New member
Hello all,



Has anybody hear a tenant willing to pay 1 year rent in advance? I have a condo in Irvine that is for rent and one party is extremely interested with the property and willing to pay 1 year rent in advance. I have never heard this kind of deal before and I am worry that something is not right.



Opinion please...



Cheers,

SHamu
 
[quote author="Shamu" date=1244435575] I am worry that something is not right.</blockquote>


Have you pulled their credit report?
 
I asked my agent about it but my agent told me since they are paying cash, why should I care... but I disagree.
 
[quote author="Shamu" date=1244436325]I asked my agent about it but my agent told me since they are paying cash, why should I care... but I disagree.</blockquote>


Well let's say that they could have begged, borrowed, or stole the money to front a year's worth of rent because they don't have good credit to their name and want to secure occupancy. Now what happens when their lease is up and it's time to either renew or move out. I would think this could present a potential problem if their credit sucks and they have nowhere else to go. I wouldn't want to end up with squatters who have run out of cash and viable alternatives but that's just me. Maybe this isn't their situation but you won't know unless you look into it and I think it's best to cover all your bases. Your agent is only concerned with getting them in, not getting them out.
 
When I was looking for an apartment a couple of years ago, we heard of a tenant paying rent 3 years in advance! I also know someone in the Bay Area who paid a year in advance. So I guess it does happen.
 
We offered 6 months up front in exchange for a decrease in the rent. I do not know what our credit score is, but we have never missed a payment on anything.
 
[quote author="awgee" date=1244441356]We offered 6 months up front in exchange for a decrease in the rent. I do not know what our credit score is, but we have never missed a payment on anything.</blockquote>


That's a good point. Shamu - did they ask your realtor to negotiate a rent decrease in exchange for the year's worth of payments up front?
 
[quote author="SoCal78" date=1244441945][quote author="awgee" date=1244441356]We offered 6 months up front in exchange for a decrease in the rent. I do not know what our credit score is, but we have never missed a payment on anything.</blockquote>


That's a good point. Shamu - did they ask your realtor to negotiate a rent decrease in exchange for the year's worth of payments up front?</blockquote>


My understanding that while not very common, rent pre-payment does occur, typical in exchange for lower rent or some other condition. When we were "applying" to lease the home we are in, which was clearly advertised as no pets allowed, I was concerned because we have an 80-lb. chocolate lab. Deuce said no worries, if they put of a fuss, let's just offer to prepay six months rent. Landlords as you may expect don't like to turn down big cash unless they really have to.
 
Thank You all for the replies.



I asked my agent to schedule an appointment with the prospect so I can get to know them better. The agent agreed and hopefully he will schedule something for next week. He told me that this is landlord's dream to have the tenants to pay in advance... but you know how sales people are *No Offense!!!* but they will say anything to sell whatever they are selling.



They did, however, try to negotiate for a decrease in monthly payment since they are paying 18 months in advance. We lower our requesting price and submit it to them. I was concerned earlier as I have never seen anyone that is doing this but knowing there ARE people that actually doing it makes me feel more comfortable. I was worried that they will do all sorts of illegal stuffs (methlab? Lol) and I have no power in evicting them.



Another scenario that I am worry is like Socal78 mentioned, what If after the lease is up they are not able to make monthly payments and does not want to leave the house? Can we evict them?



- Shamu
 
I have a question from the other end. How does the tenant that pays in advance know that the house will not be foreclosed? A relative got a lower rent for a years payment in advance on a 4 years lease. The house was purchase at the near the end of 2005. I don't know the credit of the landlord nor loan amount.



Awgee's prepayment of 6 month give 2 to 3 months heads up with a NOD, so you won't be out that much 1 to 3 months but 8 to 9 months loss on the rent prepayment would be big.
 
[quote author="Shamu" date=1244453917]Thank You all for the replies.



I asked my agent to schedule an appointment with the prospect so I can get to know them better. The agent agreed and hopefully he will schedule something for next week. He told me that this is landlord's dream to have the tenants to pay in advance... but you know how sales people are *No Offense!!!* but they will say anything to sell whatever they are selling.



They did, however, try to negotiate for a decrease in monthly payment since they are paying 18 months in advance. We lower our requesting price and submit it to them. I was concerned earlier as I have never seen anyone that is doing this but knowing there ARE people that actually doing it makes me feel more comfortable. I was worried that they will do all sorts of illegal stuffs (methlab? Lol) and I have no power in evicting them.



Another scenario that I am worry is like Socal78 mentioned, what If after the lease is up they are not able to make monthly payments and does not want to leave the house? Can we evict them?



- Shamu</blockquote>


Homeless Newbie,

Not legal advise. As for the MethLab, most leases that I've seen have provisions for eviction for making the place unsafe, illegal, etc. If they are making break the lease and are in jail/prison, it looks like they will essentially evicted by the police. If I owned the property, I would have biannual visits to inspect and repair the place.



A friend had a place that the tenant and wife lost it. The place was red tagged. Luckily the husband's parents co-signed. The parent's insurance paid after about a year. My friend wasn't expecting payment.



How much did are you discounting it for 18 months in advance?
 
My husband and I did this when we first found our place to rent in Irvine. We saw it and liked it and were disappointed to learn they had already found a renter.



We didn't want to get into a bidding war so we asked our agent to ask the owner's agent if they'd reconsider our offer if we paid 6 months up front. Our agent thought it would work and sure enough the owners chose us over the other renters. They hadn't filled out any paperwork yet apparently. Since they still pulled our credit report the hefty payment just made us look like a safer bet.



We had considered offering a year's worth of rent up front but figured that would be overkill. We had a friend renting his house in South County who had tenants that had paid a year in advance - which is where I got the idea.
 
[quote author="NewToOC" date=1244522879]My husband and I did this when we first found our place to rent in Irvine. We saw it and liked it and were disappointed to learn they had already found a renter.



We didn't want to get into a bidding war so we asked our agent to ask the owner's agent if they'd reconsider our offer if we paid 6 months up front. Our agent thought it would work and sure enough the owners chose us over the other renters. They hadn't filled out any paperwork yet apparently. Since they still pulled our credit report the hefty payment just made us look like a safer bet.



We had considered offering a year's worth of rent up front but figured that would be overkill. We had a friend renting his house in South County who had tenants that had paid a year in advance - which is where I got the idea.</blockquote>


I saw some tv program on renters who paid in advance and remodeled only be have the house foreclosed and evicted with no owner to be found. The program reported the tenant was out $10,000 and left the remodel appliances behind because of the extreme short notice. Renter did see some NOD, but the landlord BS'ed to continue getting the rent. No recource with the bank and no prior owner to be found. The huse may of been in the IE or Riverside.



Did you take any steps to assure that the owner would actually use the money to pay the lender?
 
[quote author="newbie2008" date=1244530352][quote author="NewToOC" date=1244522879]My husband and I did this when we first found our place to rent in Irvine. We saw it and liked it and were disappointed to learn they had already found a renter.



We didn't want to get into a bidding war so we asked our agent to ask the owner's agent if they'd reconsider our offer if we paid 6 months up front. Our agent thought it would work and sure enough the owners chose us over the other renters. They hadn't filled out any paperwork yet apparently. Since they still pulled our credit report the hefty payment just made us look like a safer bet.



We had considered offering a year's worth of rent up front but figured that would be overkill. We had a friend renting his house in South County who had tenants that had paid a year in advance - which is where I got the idea.</blockquote>


I saw some tv program on renters who paid in advance and remodeled only be have the house foreclosed and evicted with no owner to be found. The program reported the tenant was out $10,000 and left the remodel appliances behind because of the extreme short notice. Renter did see some NOD, but the landlord BS'ed to continue getting the rent. No recource with the bank and no prior owner to be found. The huse may of been in the IE or Riverside.



Did you take any steps to assure that the owner would actually use the money to pay the lender?</blockquote>


The owners of the house are two doctors. We checked -they are indeed doctors. They bought the house to live in and then accepted positions in the East Coast. This relocation was supposed to be temporary but we just renewed for our third year. We only prepaid those first 6 months. Now they get a rent check every month. We check that they pay their property tax bill on time. They are cash flow negative about $800 a month according to their realtor but they put enough down that they aren't likely to walk out on their property. Their agent did mention in renewing this year that they asked him to do an analysis on what their home is worth because they were considering selling it but they didn't like the number he came up with so they are "waiting for the market to improve to sell". We didn't remodel or put any money in the house - not even paint.



Now that we know more about how bad the foreclosure situation is in the area I'm not sure I'd prepay rent again even though it worked out for us in this instance. It just seemed like an original way to get this house vs. having to continue looking for a decent rental at the time.
 
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