When screening tenants, income is at least 3 times the rent (traditionally). Is that 3 times their Gross income or Net income? I assume Net, but being a rookie, I don't want to make any assumptions. Thanks!!
When screening tenants, income is at least 3 times the rent (traditionally). Is that 3 times their Gross income or Net income? I assume Net, but being a rookie, I don't want to make any assumptions. Thanks!!
Use their gross income, that's the general rule of thumb. Also make sure you use credit score as criteria. I made the mistake once here in Columbus with a tenant. They made $100k, but had a 592 credit score, 6 months in they stopped paying rent...
I believe that rule of thumb is for the gross income, but assuming no debts. So, for a $2k rental, thats $6k monthly income or $72k salary. Again, if the person has additional debt burdens, this rule of thumb breaks down and you have to be more detailed.
When screening tenants, income is at least 3 times the rent (traditionally). Is that 3 times their Gross income or Net income? I assume Net, but being a rookie, I don't want to make any assumptions. Thanks!!
Use their gross income, that's the general rule of thumb. Also make sure you use credit score as criteria. I made the mistake once here in Columbus with a tenant. They made $100k, but had a 592 credit score, 6 months in they stopped paying rent...
Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes
5y
I would focus on 3x gross rent. But that is only one of many qualifications the tenant must meet. For example, no unsatisfactory credit, no evictions, owing another community/landlord money, open bankruptcy, must be verifiable income, verifiable rental history over minimum 24 months....
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
5y
I just realized it’s funny that states without income tax still use 3x. At 5-10% maybe it doesn’t come in to play often. Guess it just makes them more qualified.
It depends on the tenant. If they are on Section 8 it would be 3 times THEIR portion of the income (lets say they pay $500 a month for an apartment that was $2,000, it would be $1,500 out of their pocket, so you would base it on that).
Other than that would be 3 times (or however many times you decide) it would be based on their gross income.
@Michael K Gallagher I realize your responses from 2 years ago so I don't know if you were ever on here anymore. However, I wish more approached and handled perspective tenants realistically as you do. I understand there is a reason for policies and rules however, if someone's income falls $25 short of 3x rent, excluding a reasonable car loan [I personally say pay cash however, operative word being ... personally] no significant monthly outgoings and obviously, e no prior at-fault broken, unsatisfied leases, I would say go for it. The other thing I am noticing and have serious issue with is more and more complexes requiring "tenant protection package" and is NOT renters insurance alone. Otherwise it wouldn't be called a package. In addition to renters insurance, It includes things such as identity theft which people can research and purchase on their own and other miscellaneous nonsense etc. Though I am struggling to see how, clearly it would have to be of some benefit to the landlord or complex. Not only that, I don't see how add-ons aside from renters insurance can legally be mandated. Tiffany Fort Worthless, TX