Tenant Bank Statements

[Serafin Fernandez]

Hello All,

I am a new landlord looking for advice. My properties are Class C properties. I have recently asked for two most recent bank statements. What is it that you look for in a bank statement other than income verification? Do you ask for full bank statements or only the first page?

I would like to see some reserves but being class c I’m not sure if I should expect that or use it as a criteria to disqualify.

[Marcus Auerbach]

There is not good answer to your question. What you will find is that most people (not only renters) don't have savings. They use credit cards for emergencies (Yeah, right..) 

We use mysmartmove (by transunion) for credit score and financial and criminal details, then compare that with the information provided on the application form to look for inconsistencies.

Also the interview is a big part of decision making, because most important is to have a person who is responsible and keeps your property clean.

We don't look at bank statements, but we do want to see the last pay stub before we sign the lease and make sure the employer and the amount matches the application.

[Kevin Sobilo]

@Serafin Fernandez, I agree with @Marcus Auerbach.

I rely mainly on pay stubs. However, IF I suspected that something was being misrepresented with their financial picture I might ask for bank statements to double check.

Paystubs only work for w2 employees. Some people have other income sources such as Social Security, pensions, etc. For working people you often come across self employed 1099 contractors.

For those self employed people, they will OFTEN want to show you bank statements! However those can be GROSSLY misleading! For example an Uber driver might show $4k per month in deposits, BUT that doesn't factor in their EXPENSES such as fuel and maintenance which might be $1k per month. In addition self employment income can be VERY inconsistent throughout a year with busy seasons and slow seasons. So, for those folks I need to look at their tax returns because that will show me income and expenses for a whole year. 

[Serafin Fernandez]

Thank you @Marcus Auerbach and @Kevin Sobilo for your responses. Very helpful as choosing can be difficult in the class that I am in(as a first-time landlord). 

I ask both of you for input on the interview process. What is it that you ask that gives you comfort? What are common questions? Any articles, youtube videos, or books that you would recommend?

I have pre-qualifications questions but they revolve around number of occupants, household income, vehicles, pets. If they pass they can view and submit an application. I assume I should decide using the application. 

[Nathan Gesner]

Why ask for bank statements if you don't know the reason? Here's a guide on how to screen tenants.

I recommend you include some of your key qualification criteria in the advertisement. For example, I mention that every adult must pay a $30 application fee, pass my credit/criminal background, make a combined income of 3x the rent, and whether or not the property accepts pets. Use the top three or four discriminators so applicants can screen themselves.

Then you need to have clear screening criteria yourself. What's the lowest credit score you will allow? Do you check Landlord references? Do you verify their income? Do you know how to read the credit/criminal background? What if they have collections or judgments?

Here's a detailed guide on how to screen applicants: Application Screening Guide

[Marcus Auerbach]

The BP guide is really good!

We rent single family homes, so we have a conversation about yard maintenance, snow removal etc - have you don't this before, do you have the tools etc

I also bring up house cleaning questions, by telling them we had a tenant who did not own a vacuum cleaner, did not know how to run a dishwasher, had a mess in the basement etc - and then see how they respond.

That is a non-offensive way to talk about house cleaning and you'd be surprised how different the responses are. Some just try to fake an answer, but you can tell who is honestly surprised and the  they start talking about their cleaning routines

[Lily Wong]

Quote from @Mike Tamulevich:

Hi, Serafin!

At Marketplace Homes, we require all applicants to connect their bank accounts directly through Plaid to verify their income right from their account. This helps us avoid manually checking bank statements, which can unfortunately be forged pretty easily. People can alter PDFs, change the numbers, or even use fake templates that look incredibly real. Some red flags to watch for are inconsistent fonts, blurry text, or mismatched information across pages. When in doubt, always double check. In today’s world, you can never be too careful, unfortunately!

Good luck!

I second this! I've caught fake bank statements from potential tenants and it was just because the font looked slightly off. The bank statement itself was real BUT they changed the name of the person on the account to theirs. It seemed like they borrowed a relatives bank account and edited the name & address to theirs. I also took the statement to the bank & they were able to verify that it was forged.