FAQ: Why Do I Have to Show Proof of Income If I Want to Rent?
We conduct many checks when a prospect applies to rent one of our homes — but why is proof of income so important?
The truth is, background checks, credit reports and references don’t tell the whole story about whether a prospect is qualified to rent. Our goal, ultimately, is to determine whether a prospective tenant is a potential asset, or a liability.
At SMART, serving the greater Las Vegas valley, we scrutinize critical financial information each time we qualify a rental applicant. Based on our years of being in property management, here are some of our thoughts on the process.
Verification is Critical
Again, screenings, scores, and statements only tell some of the story about a prospective tenant. 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, 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 also check with their current landlord to verify their answers.
We also check with their current employer to to find out how much the prospect earns each month. 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.
Proof of tenant income here in Las Vegas needs to be assessed through financial documentation, and also through the potential tenant’s current and past financial situations. At SMART, 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.