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Updated about 7 years ago on . Most recent reply

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Kevin Wang
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How to verify income for self-employed? First time landlord needs help!

Kevin Wang
Posted

Hello, I am a newbie landlord and is wondering how to verify income for self-employed people? Tax return? Please advise!

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Bill Gulley#3 Guru, Book, & Course Reviews Contributor
  • Investor, Entrepreneur, Educator
  • Springfield, MO
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Bill Gulley#3 Guru, Book, & Course Reviews Contributor
  • Investor, Entrepreneur, Educator
  • Springfield, MO
Replied

I'm sure that there would be executive rentals and commercial properties where a business owner will provide last 2 years tax returns and current income statement. These should be gathered directly from the IRS or the accountant.

If there is a CPA, you could send a verification of income for the past two years, as a letter and have them fill in the blanks and sign it and mail it back to you, then follow up with a phone call to ensure they mailed it.

For smaller business folks, lawn care guys, construction etc. I can look at a credit report, last 6 months bank statements and credit card statements and see how they live. If there are lots of ATM withdrawls for $20 and charges for hamburgers, they are poor money managers. If I see charges at Judy's Bar 4 times a week, they have a problem.

I also ask for three business credit referrences and send an authorization to release credit information and follow up with a phone call. If the guy is in the lawn business and has a small acount at Joe's Lawn Mower Shop, that is probably not reported credit.

I also ask for a business card. Many printers in my area will verify the business before printing cards. A quick search on line to the Secretary of State tells me they have filled and are in good standing.

So your perspective tenant simply signs some verifications and authorizations and gives up some statements, not a big deal, if it is, you don't want them. Good luck

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