Today’s headline: 41% of polled Americans cannot raise $400.

New term: the ‘financially fragile’

Me: i suspect those 41% generally represent renters.

We will sign and give keys with the deposit amount because it’s rare for and applicant to have dep and first month rent.

PayDayRent is win-win. They get in with smaller amount and we get paid weekly.

If 41% can't raise $400.00,...can we assume here the other 59% CAN raise $400.00? Those are the ones I look for. With statistics, there is always a flip-side to the coin.

want to bet they all have a smart phone where they have there eyes glued to it all the time

Unlike Brad, I would not assume that the 41% generally represents renters. Plenty of people buy houses that they can't afford. How does this happen? Real estate agents and mortgage companies are all about telling buyers how much money they can borrow based on their income/credit. So they buy a house that costs just that much. And then they become "house poor."

Some anecdotal evidence: I live in an upscale neighborhood in a fairly prosperous city. Just before Thanksgiving every year, I see the Rent-A-Center and similar trucks in the neighborhood. Then again after the holidays, usually after the Super Bowl. Why? Nice house, but can't afford furniture. So they rent some nice sofas and a big screen TV for a couple of months.

I rent Class C homes to mostly Class C tenants.

We collect full security, pet registration fee ($150 per animal), and the first scheduled rent payment (bi-weekly, bi-monthly or monthly) prior to lease signing. Works for us!

Yes, the reality is many are living pay check to pay check. They rob Peter to pay Paul, and it's only a matter of time until the whole house of cards comes crashing down. A few days off work due to illness (kids or theirs)... 1 semi-big car repair... 1 wild night out partying... 1 big screen TV... 1 trip to the casino... I keep that in mind when folks fall behind on rent. "Catch up?" Not likely. We proceed with the process of filing once rent is 7 days past due. No P or Q in Missouri, so I can be a little flexible on the timing and almost always ensure we get court date in the following month so we get 2 months rent on the judgment instead of 1.

I try to find the 59% who can come up with $400. There are responsible Class C tenants. I'm likely skimming the 10% off the top who have money and solid references. Garnisheable income, yep! Gotta have it.

Here's an ironic fact: these folks don't HAVE to be that broke. The applicants I reject often only work 25-30 hours/week at one job. They'll be a couple hundred bucks per month shy of my minimum of income must be 3x the rent. Get a 2nd job? Get a roommate? Start a side biz?

That's how you get on solid ground financially. But I guess it's easier to vote for Bernie or Cortez to just hand you whatever.

{{{{{{{....... 41% of polled Americans cannot raise $400 .......}}}}}}

Where did they take this poll? A homeless shelter? Very few people could not raise $400 in a real emergency. Credit cards, pawn shops, Payday loans, a couple of days of babysitting or mowing lawns. Even emergency funds from churches and charities.

Most of my tenants have relatives that could be tapped in a genuine emergency. Maybe not for money to buy a new big screen TV, but for medicine for a sick child, or even help with the rent because of temporary job loss.

Keep in mind these people groups all count:

People in jail

People in nursing homes

Infants

Children

I’m with Steve in Tennessee; a whole lot of ‘keeping up appearances’ out there.

Personally, I think many of my lower income tenants are in better shape financially (and spiritually, but that’s other topic,) than many of the homeowners out in the ‘burbs’. Homeowners name might be on the title to the property, but, the bank holds the mortgage. A lot of people are out there driving expensive leased cars, while my tenants pay cash for their clunkers.

Busy, that's a really shortsighted financial view. Your lower income tenants MIGHT have a lower rent than the homeowner pays in PITI, but they are paying utilities just like the homeowner. And the homeowner in the burbs with the white collar job will have a paid off house in 15-30 years going into their retirement.

David, rents in my neighborhood are about three or more times what PITI on a mortgage in the same neighborhoods. I am encouraging my tenants to go on to home ownership after renting from me, though some will be lifelong renters.

I can agree that persons who rely on asset appreciation on that house in the burbs for their retirement are short-sighted.

People I know just refinanced their ‘house in the burbs’, so they could remodel the house into their dream house. Then , job trouble came along. So, they decided to do any remodeling themselves, trying to get help from friends, and are using the refinance money for other ‘ things’ (Vacations are planned.) I can only shake my head. They will have little equity in that home by retirement.

Not sure I agree with the stereo-type that white-collar renters are financially responsible. That leaves the implication that blue collar workers are not. I don’t like to put people in a class of ‘financially responsible ‘ based upon something other than looking at THAT individuals finances. There are ‘white-collar’ family memberswho wanted to borrow money from me, and I have only been a ‘blue-collar’ worker.; they went on to eventually file bankruptcy. Good thing I didn’t loan. As a worker, I wasn’t the boss in charge, I always worked for the boss in charge (teachers, psychologists) and some of those supposed ‘professionals’ sure didn’t have much common sense when it came to a lot of things, especially financial sense.

I find tenants who are determined to move on up in life. I have been blessed in my life, and can sometimes extend a hand ( information, advice, support, sometimes a payment plan.)

Eventually, ideally, most of my tenants would go on to home ownership. My city sure could use the stabilization that comes from having more home owners. But, David, in my opinion, it is short-sighted as a SOCIETY to overlook persons with ambition, heart, desire for a better life, just because they don’t have a fabulous credit score. I want people who will put in the efforts to get to that better life, through legal, verifiable means. But, the nice thing about this landlording gig is, there is room for all types of landlords, with all types of screening criteria, all types of landlording practices.

As long as the government stays out of our way, lets us be good landlord practitioners without saying each landlord has to screen EXACTLY as other landlords screen. I screen my applicants fairly, as do you. We just don’t value the same criteria. But, that’s a GOOD thing.

I wasn't talking about refinancing a mortgage. I was talking about paying off a mortgage and having a paid off house in retirement as opposed to continuing to pay rent while on fixed income SS

You weren’t talking about refinancing a mortgage? Well, guess what? that is what a lot of persons with ‘good credit’ do! One cannot make the assumption that even most of those houses in ‘the burbs’ will be paid off by retirement. Well, one can assume what they want. But, there are a lot of refinancing going on. I din’t Think our nation’s appetite for ‘pulling the equity ‘ out of a home was curbed during the housing market downturn. It just meant that those who wanted to pull equity didn’t have any to pull for a while. The ads are out there again for refinancing for education, home renovation, debt consolidation.

had an 850 for years, but I only worked part-time. Wouldn’t have qualified for a rental on my own income. Being Mom was the primary job.

Then, kids grew up, housing market was having a fire sale, so I started the landlording practice. Took out a zillion credit cards to finance things , husband wasn’t on board at that time. Tanked my credit score. Yeah, 90% utilizations will do that to a score. My credit score spent more than a few months in the high 400s! Yikes, less than a year after having that 850 for years and years.

" credit score is a snapshot in time" No that is not true. The credit score takes into account your credit history. Not simple what your credit is at that time.

I had a building full of tenants that complained to the City that I was trying to squeeze blood out of them in the way of a rent hike. We are limited to a 3% rent increase under rent control.

So the City, in a hearing, asked me why I was a slumlord and bleeding my tenants dry? I explained the following:

People buy $400k houses from me all the time with $3k or $5k down. Granted they have strong income and credit, but no money.

David, I see what you are saying but Busy has a good point.

Example, if you go debt free and have no credit cards and pay cash or don't buy, you can go from 850 score to inactive credit which is treated like no credit. You get punished for being extremely financially responsible.

You're mixing things that are inaccurate. You can maintain a very high (well above 800) credit score without DEBT.

The credit score system is "sort of set up" to keep you proving that you are good with credit that is offered to you. That does NOT necessarily mean DEBT.

I have a very high credit score. I have lots of credit cards (and have done multiple trips all over the world for near-free because of the bonuses from them). But I have very, very little "debt."

- John...

John, you have credit cards and you use them.

Try going completely debt free and do not have or use credit cards and just buy with cash only or debit card and watch what happens.

You're still missing the point. You stated that you must have DEBT to have a good credit score. That is not the case. You can use credit cards and pay them off in full -- and therefore not have any real "debt" -- and still have very high credit scores.

THAT is what I am saying. This idea that the system requires you to stay in debt to have a good credit score is simply wrong.

- John...

P.S. And I am "completely debt free" except for a couple of rentals with loans. But I still actively use credit cards (but I don't consider that "debt" because they are paid off in full every month).

I should probably have said you must use credit in one form or another.

If you only use cash and no form of credit then after a while you go into inactive status. No score.

Yes, obviously. Again, the credit score system is designed to show that you are good with credit offered to you and pay it back as planned. Therefore, if you don't use any, then your score goes down, of course.

In any case, sorry for misunderstanding what you MEANT, as for what you SAID, you said:

"The system is sort of set up to keep you in debt."

THAT is what I was disagreeing with. The credit score system is not at all "set up to keep you in debt." It is set up to show your likelihood of not defaulting on credit give to you.

Nothing about it is "set up to keep you in debt." And I stand by my statement that debt is not required to keep a very good score.

Again, I do agree with you that not using credit at all will cause your score to drop. But that isn't what you seemed to be saying.

- John...

Thank you for explaining.

"The system is sort of set up to keep you in debt."

I meant more along the lines of it being unfair that you could have excellent credit and then if you decide to go totally debt free and use no credit then your score is wiped out and you are treated almost as if you were not a responsible person when the totally opposite is true.

People advise all of the time for people to go debt free but neglect to tell them of this problem that occurs.

If I were to come to you to rent a home from you and have no credit score and am showing inactive credit and now no credit history, would you rent to me? Most people probably would not. Even though prior to this, this person had the best credit on the planet, so to speak.

6x6: Just to note it, in our rentals, if you show up with no credit score (not a bad one, but basically no credit or not enough to generate a score -- which we get now and then), then we certainly WILL still consider you provided that you have good, long-term/established employment.

But, yes, I know that you are correct that many people would not accept that person. But we still consider them. We're concerned about bad credit, but not as much about no credit. This is a college town so we often get applicants with no credit history yet.

- John...

No credit history is accepted here too. Even bad credit depending on why it is bad...

But 6x6, it's called a CREDIT score because it scores how you use CREDIT. If you don't use credit, you can't earn a score. That just makes sense.

WMH and John, thank you for responding.

I see your points and agree.

We had bought a house from someone who was moving. They were from a certain ethnic group that doesn't deal much with banks, and were anxious for a cash deal. We were okay with that, but we insisted that the closing be done through the title company, as we always did.

I brought the cash with me-- about $9k'ish. The title company wasn't legally allowed to deal in any amount of cash over the amount of $800. (Maybe it was $400. But I think their legal limit was $800.) I had to take it across the street to the bank, exchange it for a cashier's check, and then the sellers would take it right back down about an hour later, and exchange it for cash again.