Sometimes people can pay but choose not to. Ability to pay is necessary but not sufficient. Demonstrating a proven track record of financial responsibility makes a landlord much more willing to lease on favorable terms.
> By being a land lord, you are preventing people from buying and building equity.
Landlords increase the supply of housing by improving and renovating older structures or converting them into residential use.
A landlord has the exact same costs as a homeowner. He has a mortgage, property taxes, insurance, repairs, etc. Because he wants to operate at a profit he needs to keep those costs low, and a lot of landlords do that by purchasing distressed properties at lower prices, improving them, and leasing them profitably.
Alternatively a landlord can lease to tenants who have poor credit and can’t obtain a mortgage to buy a house. Those tenants would probably be homeless if it weren’t for landlords willing to risk leasing to them. No bank will lend $300k to those tenants so they can purchase the houses they would otherwise be renting. Those landlords are charging higher rents commensurate with the higher nonpayment risk inherent in tenants with low credit scores.
Generally the only thing preventing tenants with poor credit from building home equity is their poor financial decisions.
> Demonstrating a proven track record of financial responsibility
credit is a record of your debt load, nothing else, but landlords use it as a proxy.
I have no credit and had to laugh when I realized no one would rent to me despite my 6-figure income. I had to start vetting THEM to see if it was a waste of time or not.
These kinds of things sound good in your head, but they're just not reality.
Credit allows to get a probability of how likely it is payments get done. Landlords use it to get a probability of how likely payments will be.
In your case, they don't have your credit, so they obtain the probability through other variables, like your income. Most likely they'll assign a high probability to you paying, but the confidence interval mat be too big for their liking.
Obviously credit history doesn't give zero information, which is implied in this thread several times.
Sometimes people can pay but choose not to. Ability to pay is necessary but not sufficient. Demonstrating a proven track record of financial responsibility makes a landlord much more willing to lease on favorable terms.
> By being a land lord, you are preventing people from buying and building equity.
Landlords increase the supply of housing by improving and renovating older structures or converting them into residential use.
A landlord has the exact same costs as a homeowner. He has a mortgage, property taxes, insurance, repairs, etc. Because he wants to operate at a profit he needs to keep those costs low, and a lot of landlords do that by purchasing distressed properties at lower prices, improving them, and leasing them profitably.
Alternatively a landlord can lease to tenants who have poor credit and can’t obtain a mortgage to buy a house. Those tenants would probably be homeless if it weren’t for landlords willing to risk leasing to them. No bank will lend $300k to those tenants so they can purchase the houses they would otherwise be renting. Those landlords are charging higher rents commensurate with the higher nonpayment risk inherent in tenants with low credit scores.
Generally the only thing preventing tenants with poor credit from building home equity is their poor financial decisions.