When you have a property for rent, you’re likely seeking qualified tenants with proven track records. Unfortunately, we don’t live in a perfect world so some tenants may ask to use a co-signer. Should you allow for a cosigner on your Salt Lake City, UT rental property?
Like anything else in the world of property ownership, there are pros and cons to consider with cosigners. We are here to showcase the most important elements of cosigners and what it means for building wealth.
What is a Cosigner for a Salt Lake City Rental Property?
A cosigner for Salt Lake City, UT rental homes brings in a second person who is responsible for its terms. Any debts that are owed to you from the tenant are transferred to the cosigner in the event that they go missing.
When the lease agreement is negotiated, a cosigner will sign along with your tenant. This is recorded and dated for a binding contract. The cosigner must follow the obligations outlined in the lease.
There are several reasons why your tenant may want or need a cosigner for their lease, ranging from credit to low-income tenants.
Why Do Tenants Need a Cosigner?
Not all tenants need a cosigner, but these are some reasons why you might run into this situation:
- The tenant is young and does not have an established credit or rental history. This is when they will typically turn to mom or dad as a cosigner.
- The tenant may have a low credit score. This is potentially the result of spending beyond their means, but they could have also incurred significant debt from medical expenses or no other fault of their own.
- The tenant doesn’t have enough income to rent your property. The general rule of thumb is for the tenant to spend 30% of their monthly income on your rental payment.
Even though a cosigner is on the lease, this doesn’t necessarily mean they will live in the unit with your tenant. Some cosigners are roommates while others are parents or family members who do not live at your property.
What Are the Responsibilities of a Cosigner?
Once a cosigner signs on the dotted line, they have several responsibilities if the lease falls through with your tenant.
A cosigner has several responsibilities when it comes to your tenant’s lease. Some of these may include one or all of the below:
- Responsible to pay any missed payments on behalf of the tenant
- Responsible for paying toward any damages that the tenant left on your property, especially if it’s beyond normal wear and tear
- Responsible to see that the lease is carried out and its entirety, despite what ends up happening to your tenant
A cosigner has more skin in the game than just a signature on your lease agreement. If the cosigner refuses to pay or follow the agreements laid out in the lease, their credit may become damaged. Their credit is reported to the credit bureau just as you would do to your tenet.
Is It Ever a Good Idea to Allow a Cosigner?
A cosigner can be beneficial to you as a landlord as well as your tenant. Keep in mind that all tenants who require cosigners aren’t necessarily going to bail on your lease. There are plenty of honest people who need some extra help securing a rental property in Salt Lake City, and you can help bridge this gap by allowing a cosigner.
How to Protect Yourself with Cosigned Leases
As a landlord, you are most likely concerned about how you can stay protected when a cosigner is involved. The good news is that when you work with an expert property management company in Salt Lake City, this can be an entirely streamlined and stress-free experience.
Here are some ideas to ensure that this arrangement is beneficial to all parties involved:
Strong Lease Negotiations
Drawing up your own lease is never a good idea. It’s easy to overlook important yet small details. Keyrenter Property Management can help you draft a lease and conduct negotiations with tenants as well as cosigners. Being aware of all clauses in your lease can help avoid major problems and headaches down the road.
Client and Cosigner Background Checks
The lease is certainly important, but you can’t forget about background checks. A background check should be used on both your tenant and the cosigner. This involves checking background information including credit history, rental history, employment verification, and criminal background information.
Determine Your Dealbreakers
There are times when you will run a background check on a tenant or cosigner, and find information that is not to your liking. While no one is perfect, there are times when you can overlook a troubled past.
From there, you’ll need to decide what you are unable to overlook even with a cosigner. This might be something like a very poor rental history or a serious criminal background.
Ultimately, the landlord gets the final say-so if a cosigner can go on the lease. One of the biggest advantages is that co-signers can help fill vacancies when the market is tight.
How Can Keyrenter Salt Lake City Help?
Keyrenter Property Management Salt Lake City is a different kind of property management company. We keep landlords in the loop with our educational webinars and weekly updates on potential market issues. With our leasing guarantee, rest assured that we will find you high-quality tenants for your rental.
While we help you find the best tenant for your property, know that we have industry-leading low eviction rates. Our tenants are precisely vetted and qualified. In the event that there is a problematic tenant, we pay for the eviction out of our own pockets.
Find Your Best Tenants with Keyrenter Salt Lake City
With our Tenant Advantage Program, it’s no wonder why we attract some of the top tenants in Salt Lake City. If the tenant asks for a cosigner, we will work through the process with you and determine the best decision with each unique client.
Have questions about a cosigner or your Salt Lake City, UT rental home? Get in touch with us today to learn more.