Rent to small business vs. w2?

Question

Are you guys more willing to rent to a tenant with a small business or a tenant with a w2?

For reference, the tenant with a small business makes $10-20k more than the w2 tenant.

Thank you in advance!

Cari Sweet · Answer

In Oregon we have to accept all legal forms of income, and in Portland, we have to accept the first qualified candidate that completes their application in full. So, I haven't run into a situation where I'm comparing two candidates. But, generally speaking, I have no real preference. Having been self-employed for nearly a decade (as an independent contractor, gig worker, and business owner), I'm very comfortable looking at profit and loss reports, tax documents, bank statements, 1099's, and work contracts to determine if I believe a candidate is capable of paying the rent.

Richard F. · Answer

Aloha,

It depends on what, exactly, is meant by "makes...more". If you are looking at, bank deposits, or sales figures for the business (vs. the gross pay for w-2), that does not convey a useful financial picture. Regardless of the type of business...driveshare, handmade jewelry, auto repairs, food truck, whatever...you must also determine the cost of them operating that business, PLUS the cost of normal living expenses. Living paycheck to paycheck is no different than running a home business on a shoestring, except the cash flow is usually much more erratic. As a LL, you want to see stability in order to be reasonably certain rent will be paid month after month.