Architect · San Diego, CA · Member since 2010 · 3 posts · 0 votes
I purchased a small home in an age restricted (55+) community. I expect many of the potential renters will be retired, so their income will be from from social security, pensions, and savings.
Does the 3X rule (income should be 3 times the rent) still apply in this case?
It really depends on what the rent is. If it is $500 per month, then definitely make sure income is 3X rent. But, if rent is $2500 per month, 2X rent is plenty. Michelle
I think retirees potentially have fewer expenses than the average family. No kids, less spending on clothing, electronics, and furniture. I guess it all depends on the type of lifestyle they choose.
Heck, we can spend that on fuel for the boat! 2K fora fill up.
You can certainly revise that, you don't want someone in there that can get by on a grand a month really, GMI of 2800....I'd not go more than 50% as an elderly type might not have nuch at all besides food, medical and utilities,say if they don't drive. I suggest you stick with the 3X as to your standard and then make exceptions on a case by case basis. If you only have one unit in that area you won't have the issues of written qualification guidelines as you do with multi housing.
You need to assess thier lifestyle, at 55 I was buying stuff, still do, so don't think those in thier 60s or 70s don't have a life. Just don't put them in a pinch, at that rent level I'd say it's a nicer area and most will know if they can afford the rent, at thier age they should have some common sence don't ya think? :)
I agree with Bill Gulley that the requirement to have monthly gross income of 3 times monthly rent is a good standard regardless of income source. Just because they are retired does not mean that they have adequate savings and investments to cover living expenses for the duration of their lifetimes.
As I've posted elsewhere on BP, including just last night, I will go as low as 2.5 times under certain circumstances; see links: