Rental Income Requirements

[Kris L.]

Was browsing the forum and saw something I hadn’t thought about.

With a 3x income requirement, how do you account for the fairly large number of prospective tenants who are in areas like sales, where their commissions are the majority of their pay?  I guess waitresses and such would be in a similar situation.  Do you require 2 years tax returns or something to verify the income?

[Chris Mason]

Originally posted by @Kris L.:

Was browsing the forum and saw something I hadn’t thought about.

With a 3x income requirement, how do you account for the fairly large number of prospective tenants who are in areas like sales, where their commissions are the majority of their pay?  I guess waitresses and such would be in a similar situation.  Do you require 2 years tax returns or something to verify the income?

 Salespeople, just do what the mortgage industry does: two years of tax returns. If you want to be more flexible, final paystub from December of the last two years showing total commission for the year in the "YTD" column. 

Food servers and bar tenders are harder, almost none of them report their substantial tip income on their taxes and it doesn't show up (accurately) on their paystubs. Most of them can't get mortgages in amounts to their liking for this reason. You as a landlord have more flexibility and can make a better judgement call.