Tenant screening - Income = 3X rent

[Alexander Lang]

Hi BP Fam!

So the rule of thumb I hear is to have the tenants gross income equal or greater than three times the rent rate. 

Just to clarify, If I have a boyfriend and girlfriend, sisters, friends, whomever renting my unit, would that be each tenant has to qualify using that rule of thumb, or just the combined gross income of all of the individuals that will be on the lease agreement?

I do believe it is the combined total gross income, however I was thinking about this after listening to one of the podcasts (episode 48) in which @Brandon Turner stated he doesn't allow anyone to rent from him not even if they make a dollar less than that threshold, however how would that work if that hypothetical boyfriend/girlfriend couple splits up? Clearly they are both liable, they both get the certificate of rent paid (divided equally between all tenants on lease in MN at least), but is it a good practice to calculate all tenants incomes in this instance to determine if things do hit the fan that either of them can support the rent, or just go off gross income and hope they live happily ever after?

Any thoughts?

[Penny Clark]

@Alexander Felice, I have to agree with @JR T. , you are assuming additional risk when renting to more than one unrelated adults. But if you do, I'd recommend each applicant have a minimum of 2 times income to rent ratio so if one moves out the other can still cover it. Make it clear in your lease that all parties are responsible for making sure rent gets paid. Another idea is to use a month to month agreement so all parties can make a clean exit after submitting a 30 day notice. If one party moves out, the other person must pay the full rent. If they find a new roommate who meets your rental criteria, have the original tenant and the new one resign a new month-to-month lease.  I have also used month to month agreements when renting to people who have non traditional sources of income (student grants, unemployment, etc., short-term disability) or people who move frequently due to their line of work.

Rethink your rental criteria and aim for quality tenants who won't impose these types of risks or use a shorter agreement so you don't get stuck with someone who can't make the rent.

Best of luck to you!