One of the most important rental standards used by most landlords during tenant screening is monthly income of the applicants. It is smart on the part of landlords to ask their applicants to furnish their monthly income to prove that they can pay their rents easily. Landlords also have a cut off income level to reject the applications of individuals who earn less than that. However, it proves tricky for landlords to confirm the income levels provided by their applicants. You cannot take an applicant on his word and allow him entry inside your rental property, can you?
What is the rental standard of income?
All landlords have a certain rental standard that they use to judge the affordability of their monthly rent. This rental standard depends upon the amount of their monthly rent and is generally a multiple of the average monthly household income of the applicant. Most landlords want this monthly income to be at least three times the monthly rent charged by them. So, if the rent is $1000, the monthly household income of the applicant should be more than $3000 to reassure the landlord about the ability to pay the rent comfortably. If the applicant qualifies on all other standards but fails in rental standard, it is better not to allow him entry inside your property.
The reason why all landlords insist on passing their rental standard is to make sure that their tenants can pay their monthly rents without any difficulty. It reassures them that they would continue to get their monthly rent on time. If a tenant faces a financial or medical emergency, he should not think about holding the monthly rent to overcome this emergency.
Verification of income is necessary
You feel good when you see that the income level mentioned by the applicant in his form is well past your rental standard. However, you cannot believe what an applicant says in his resume, right? Many applicants tend to lie about their income only to somehow get entry in the property. But they also know that their landlord will try to verify the details of their income through his own sources. Therefore, they use creative ways to hide the facts about their income. As a landlord, you must be wary of such deceptive applicants and never accept any cash as advance deposit without confirming their income level.
How to verify the income of an applicant?
There are different ways of verifying the income of an applicant. If he has mentioned income form job, you can contact the employer to confirm his salary. Insist upon contact details of the employer to be able to gather information about his salary. Another way of confirming the income details is to look at the income documents provided by the applicant. You can take help of salary stubs, bank statement, or the income tax returns of the applicant to verify his income. However, you would be surprised to know that some applicants can produce fake income proof only to get inside your property.
You need to be alert and cautious when going through the documents provided by the applicant. Match the name, dates, and phone numbers. Become satisfied only after you feel there is no discrepancy in the details provided by the applicant. If there is any doubt or mismatch of information, it is prudent to reject the application of such an individual. No matter how much time and effort goes into confirming the income details of the applicant, never make the mistake of not verifying the income related information provided by the applicant. You can save yourself from all the troubles of nonpayment and eviction later.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.
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As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
