Prepaid Rent - Posted by Tyler

Posted by Jimmy on May 27, 2007 at 08:09:51:

too many active imaginations at work here. Why assume that a tenant wanting to prepay rent is any more likely to to be a cockroach than one who pays monthly?

do your normal background checks. talk to the prior landlord. keep an eye on this tenant and this property in the same way to do for yor other properties and tenants. do occasional walk-throughs, which should be allowed in your lease. if you see something illegal, file for eviction. the prepaid rent DOES NOT slow down your eviction.

Prepaid Rent - Posted by Tyler

Posted by Tyler on May 25, 2007 at 24:26:32:

I have a tenant who has asked to pre-pay 10 months worth of rent. At first glance, I don’t have a problem with it, but my gut says there could be some adverse ramifications to accepting this proposal if things go haywire down the line (i.e. other reasons that would cause eviction, etc.). These are great tenants, but you never know what may happen months into the future. The home is in Washington (the state). I’d appreciate everyone’s thoughts and advise on this issue. Thank you.


Re: Prepaid Rent - Posted by Natalie-VA

Posted by Natalie-VA on May 29, 2007 at 17:34:49:

If you take the money, you should check your state landlord/tenant laws to see if it requires any special handling. You might be required to keep it in an escrow account.


Re: Prepaid Rent - Posted by Carl

Posted by Carl on May 26, 2007 at 15:13:50:

Take the $$$.
In my opinion, the hardest thing about this business is collecting rent.

Re: Prepaid Rent - Posted by Anne_ND

Posted by Anne_ND on May 26, 2007 at 08:43:37:

Recently I had a tenant pre-pay three months of rent from her tax refund. She was having her 4th child and wanted to be sure she had her rent paid while she was on maternity leave.

The check bounced. Now I only take money orders for prepaid rents.


Re: Prepaid Rent - Posted by David Krulac

Posted by David Krulac on May 26, 2007 at 07:56:19:

I’ve only been renting places for 4 decades, but have never had any tennat pay a years rent. Some have offered, but for one reason or another it didn’t work out. A few were credit challenged and offered a years rent in lieu of a credit report. That may or may not be a good idea. I’d want a credit report in any event. A criminal report might alos be a good idea. Another idea would be to have in the lease that only people who sign the lease can live there, and that assigning and subletting are prohibited.

Re: Prepaid Rent - Posted by Frank Chin

Posted by Frank Chin on May 25, 2007 at 13:09:32:


I recall a provision in the mortgage document that limits the amount of advance rent permitted, as I recall 90 days. This is to prevent equity skimming, where the owner would collect 10 months rent, skip paying the mortgage, then skip town. But no one has to know if you don’t plan to “equity skim”

I had advance rent arrangements with some tenants, and I usually ask the reason why. In one case, a religious order rented apartments for it’s members, and found it more efficient to pay everything at once, rather than to get approval from headquarters each month. I finally went with 12 post dated checks on each annual lease renewal. Even here, I asked for verification the tenants are actual “nuns” in the order, and the order exists.

And make clear that you’ll still be coming by for inspections in case there’s any thoughts of turning the place into a drug lab.

If it was me, I wouldn’t turn it down.

Frank Chin

Re: Prepaid Rent - Posted by Rich-CA

Posted by Rich-CA on May 25, 2007 at 01:15:02:

I have heard that drug dealers and Meth lab operators will do this because rent time is the only time a landlord comes around a property. This helps insure they are left alone to cook their drugs (the smell makes it obvious what they are doing).

Re: Prepaid Rent - Posted by Rich_in_CT

Posted by Rich_in_CT on May 25, 2007 at 10:22:00:

I was just going to mention that. This is a big thing they try to do and it also makes it MUCH harder to evict if you have already accepted their money. They could be running guns, hookers, and drugs and you’d have a hard time getting rid of them. I personally wouldn’t take the cash if it were me until they’d been there a few months just to check them out. Obviously before they move in or you accept them as tenants CRIMINAL CHECKS as with any other tenant.

Re: Prepaid Rent - Posted by David C. Cooper

Posted by David C. Cooper on May 25, 2007 at 17:17:27:

Why not take the 10 months rent and drive by the property occasionally. If you find any illegal activities call the police and have them busted.

Clean the place up and re-rent it while the previous tenant’s prepaid rent earns you some interest until they get out of jail and claim it.

Isn’t that better than an eviction?

Re: Prepaid Rent - Posted by Rich_in_CT

Posted by Rich_in_CT on May 26, 2007 at 07:56:22:

First off, do you have any clue how much it might cost to remove the hazardous materials from a meth lab? It can go well into the tens of thousands of dollars. Between having a hazmat crew remove their chemical vats and whatnot you might have to strip the apartment down to the studs, remove all flooring, etc. Plus in some states you may have to disclose to future tenants that there was a meth lab their for health reasons just like with lead. And what about the risk to other tenants, are you willing to risk their safety (and subsequently raise you insurance exposure and raise your insurance rates) for a quick buck? I’m sorry but your post comes off as a pure slumlord, not a person that’s trying to provide a good safe environment for his tenants.

Re: Prepaid Rent - Posted by David C. Cooper

Posted by David C. Cooper on May 27, 2007 at 01:08:23:

Thanks for answering my question, no need for name calling. I’m just getting started in wholesaling and I don’t intend to hold any properties until I have a better handle on the whole business and this is exactly why. I know I have a lot to learn and I want to avoid as many mistakes like these as I can.

That being said, how would you solve the problem in a way that gives questionable folks a chance at proving themselves or is it just not worth it?