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Updated over 9 years ago,

User Stats

86
Posts
31
Votes
Bao Nguyen
  • Investor
  • Lansing, MI
31
Votes |
86
Posts

high end rental investors: does the 3x income/rent apply?

Bao Nguyen
  • Investor
  • Lansing, MI
Posted

It's part of my rental policy: household income must be at least 3 times the rental rate.  But most of my homes are renting around $1k/month or less.

Should this rule apply to high end homes that rent for $3k/month or more?   For example:

Scenario A: $900/mo rental, prospect's household income is $2700.  This prospect would qualify based on income alone.  $1800 gap between rent and income.

Scenario B: $2500 higher-end rental, prospect's household income is $6k.  Doesn't meet the 3x income/rental multiplier.  $3500 gap between rent and income.  I would imagine despite not meeting the 3x multiplier, renter B is still better off than renter A because end of the day, he/she still has more income after rent.

Let's make the example really extreme: $10k/month rental, prospect makes $20k/month.  I can't imagine turning down such a prospect - but based on the 3x rule, $20k/month is not enough.

High end rental investors - please let me know what your thoughts and experiences are with this.

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