Why Proof Of Tenant Income Is Crucial For Landlords
Tuesday, November 13th, 2018
What is Required for Proof of Tenant Income in Phoenix?
Background checks, credit reports, credit scores, bank account balances, and rental references—these are where most landlords check to determine if a prospective tenant is a potential asset, or a liability. But are these enough? Do these financial factors tell the whole story? At Austin Fleck Property Management, serving Gilbert Arizona and the entire Phoenix Valley, we scrutinize critical financial factors each time we qualify a rental applicant. Based on our 35 years of being in property management, here are some of our thoughts.
Trust, But Verify!
President Ronald Reagan quoted this famous Russian phrase when he entered into negotiations for a nuclear arms missile agreement with the Soviet Union. He said he could trust the Russians to reduce their arms stockpile, but he insisted that the US be able to verify the reduction on site.
The same can be said concerning tenant screening. Background checks, credit scores, and bank balances tell some of the story. Certainly, if these are revealing problems, then it is an indication that the tenant might not be able to meet their obligations. In this case, we would not qualify an applicant for a rental.
But even if everything checks out on paper, how do we verify their trustworthiness? In our Application for Occupancy, we ask specifically if they have ever been evicted, been late with payments, refused to make rental payments on time, or filed for bankruptcy. We check with their current landlord to verify their answers.
We also check with their current employer to to find out how much they make. We need to know that their income is sufficient to pay the rent! The rule of thumb is that the renter needs a gross income that equals or exceeds three times the rent they are paying. This reduces risk for both tenant and landlord.
Complications can arise if the rental applicant is self-employed, retired, or a student. In these cases, there are no pay stubs to check, or employers to question. A 1040 tax return, a 1099 form, a Social Security distribution statement, or a combination of these can be used instead. The more we know, the better we can assess the situation: always bearing in mind that it’s not only a question of how much a person earns, but how responsible they are to maintain financial integrity.
Mutually Assured Satisfaction
Proof of tenant income in Phoenix and the surrounding regions needs to be assessed through financial documentation, and also through the potential tenant’s current and past financial situations. At Austin Fleck Property Management, our goal is to place a great tenant with a great landlord. Our screening process is thorough and complete. We strive for a good match in every situation. And we promise; you will always have the best that we can give.