Landlords, how do you verify self-employed income?

[Daniel Mendez]

I have a tenant wanting to lease my unit. 

However, they are self-employed.

What is the best way to verify income for someone that is self-employed?

[Wesley W.]

Absolutely.  Some people use bank statements, but I am more comfortable using tax statements (e.g. 1099).  My feeling is that the tax evasion thing cuts both ways.  If they are underreporting their income to the IRS, I cannot guarantee that the revenue actually exists.  That's exactly how a lender or creditor would treat the situation, as well.

[Diego A.]

I would ask for a 12 to 24 months bank statement and the last two tax returns. I have a situation that I didn't do that, and they didn't know how much they could afford. We signed the contract and then they were always late on the payments.

[Kevin Sobilo]

@Daniel Mendez, you absolutely need tax returns!

Tax returns show not only the income but also their EXPENSES! People who are self employed often have substantial expenses. For example an uber driver will have things like fuel, vehicle maintenance etc which could be several thousand per year!

If you feel the need to verify the income exists, I guess bank statements could be requested in addition, BUT depending on the type of self employment payments aren't always regular. For example a real estate agent may only be paid when a commission is earned. So, they may earn nothing for 2 months and then bank a lot all at once.

[Russell Brazil]

Bank statement

[Kevin Sobilo]

Quote from @Russell Brazil:

Bank statement

How do you figure out what all their business expenses are with just a bank statement? Do you review a every transaction for a whole year with them and do the math?

[Mya Toohey]

Bank statements for last 3 months and last years taxes should show proof on stability of rent payments.  I require that anyway.  You can fake paystubs online.  (Learned from my mistake) I am in the Tampa Florida area so after learning my lesson,  3 months statements and last years taxes.  Hope that helps!     

[Quincy Lockett]

@Daniel Mendez

Tax returns for the previous year. And bank statements for the previous year. If they don’t have both or “haven’t filed yet”, huge RED FLAG. Move on. Most that claim self employment won’t have either.

[Henry T.]

You can't garnish their wages. I don't like anyone that I can't garnish.

[Nathan Gesner]

Quote from @Daniel Mendez:

Tax returns. If they've been self-employed for less than two years, then you'll want to see bank statements showing their income. If they've been self-employed for less than six months, I wouldn't even consider them because it's too risky.