Potential Tenants with under the table jobs

[Robert P.]

What is everyone's policy when it comes to verifiable income? I am requiring tenants to make 3x the rent, but some have jobs that are under the table. Do you accept? How do you verify, etc?

Thanks!

[Justin B.]

I'm sure you'll have varying opinions on this situation.  I'm sure some people have been doing it for decades with no issues and others have been burned.  I can only speak to my situation in helping you make a decision.  I own properties in areas where getting decent tenants is not too difficult.  Without verifiable income, they would fail my qualification and be rejected.  I just don't have time to deal with risky tenants.  Of course I own more than 1 property so an extra month or 2 without rent to find a tenant with verifiable income is just a small blip on my radar.

I also use PM's for almost all of my properties and without verifiable income, application is rejected.  They do not rent to "under the table" incomes, no exceptions.

Here are some notes on "under the table" income:

-- It's not garnishable (someone else said that too)
-- It can stop at any point for any reason between "employer" and "employee" for a ton of reasons.
-- If the IRS finds out, they always get paid first, which could mean your rent check stops.  I can all but guarantee if the IRS comes knocking it will be more money (back taxes and fees) than the tenant has.
-- It's illegal.  To be more clear, if income is not reported to the IRS, it's illegal.  If it is reported to the IRS, it's not "under the table".  So ask yourself if you want to rent to someone you know is breaking the law.
-- The income they do report (which is probably very little) could put them into a protected class, making things like evictions harder (always check state and local laws when it comes to that).

With all that being said, the risk is on you.  Hopefully that is enough information to help you make your decision :)