A simple and effective way to avoid future headaches is to require proof of income from potential tenants. In order to determine if a potential tenant is going to become a liability or an asset you’ll need to find out some information about them. All financial factors should be considered and analyzed. For example, you’ll want to know how much does the person make? How much can they actually afford? Most importantly, can you verify his or her claims?
Credits scores, background checks, rental history checks, and other documents can help shed light on a tenant’s financial situation. The screening of a tenant should also include an eviction and background check as some important information can be revealed in the reports. Making sure that a tenant will not cause problems and will be able to meet their financial obligations will reduce the risk of the landlord from having to deal with evictions and trying to collect back rent.
You should do an income verification to ensure the candidate is indeed employed and that make enough to reasonably afford rent. The golden rule is for a tenant to earn three times the total of the monthly rent. So, if the rent is $1,000/ month, the applicant should be able to verify that they earn at least $3,000 per month. There may also be instances where an applicant may have alternative income or even no income but a large savings in which case you would have to evaluate the situation independently.
How Do You Verify A Person’s Income?
There are several ways to do a tenant income check. Most people making a salary, and even freelancers have filed a W-9, should be able to show you a pay stub. You can get on a call with their employer or ask for a letter in order to get some financial background on them. A W2 or a 1099 will tell you what the person made last year which is probably a great indicator of what the next year holds for them. In the case that the tenant is changing jobs, you can always ask to see their offer letter and then perhaps contact the employer and verify. Make sure the information you get is current and accurate as some applicants may have fluctuating income and could be showing you an abnormally high income pay stub or even out-of-date tax documents.
Other Things You Need To Know
Has the potential tenant ever been evicted? If so, why? Have they filed for bankruptcy or failed to pay their rent in the past? These are obvious indicators that there can be trouble ahead. A credit and background check is also a great way to get hard facts about your applicant.
Remember that while you are trying to protect your income, you are also trying to protect your investment. You want to make sure the person that rents from you is not likely to cause any damage or any problems with the neighbors. Having a clearer picture of who they are will provide you with some insight into any potential conflicts that may arise. Before you say “rent my home in Orange County or Los Angeles” you should consult with a property management company that will protect your investment.
Getting The Right Team To Manage Your Property Is Key
The easiest and most comprehensive way to be sure your property is protected is to work with a property management company who has a solid income verification plan. If you are a property owner and would like to learn more about the benefits of working with a Southern California property manager, give our team at AllView Real Estate a call today! AllView Real Estate Management is Orange County’s premier property management and investment firm. We offer not only exceptional property management, but also real estate investment consulting and management. Call us at (949) 400-4275 or send us an email at info@allviewrealestate.com for real estate investment expertise.
