SSI income doesn't meet 3x monthly rent criteria - still ok?

36 Replies

So I have 3 applicants (a brother and 2 sisters) who don't work but get SSI disability income. Rent for my property is $850/mo, and I am requiring 3x the monthly income, which is $2550/mo in income. Combining all 3 of these applicants they get $2,099/mo. That obviously doesn't meet the criteria. But generally the 3x the monthly income "rule" is in gross income from my understanding, whereas the SSI income of $2,099/mo is what they take home every month.

Would you consider them as tenants for the property?

Is this a single family rental or apartment? I am learning the hard way I prefer all of my tenants to have an actual job. This way they aren't hanging around all day using more water (which I pay for) and have too much company/traffic in and around my building.

@Jarrett Harris This is a SFR. The tenants are responsible for all of the utilities (gas, electric, water, sewer, and trash).

I would stick to your initial screening guidelines....how long has it been up for rent?

In this case, I would probably keep them as a good plan B if you cannot rent it to someone more qualified.

@Eddie Werner Been about 20 days. It's more a question of do they really meet the requirements? Someone making $2,550/mo in income in gross pay (as the requirements say) wouldn't be taking home $2,099/mo like these applicants would, would they?

Though it's generally based on gross income, I would still be leery of this. What kind of debt are they carrying? Do they have other sources of income (stated or unstated)?

Another thing to keep in mind: SSI isn't garnishable if you have to pursue them for unpaid rent or damages.

I am trying to figure out how 3 people in one family are permanently and totally disabled but aside from that you are looking at a 18% credit. I am wondering what the tax rate is at that income level if they were working.. You have to decide if you want to credit everyone this way. it seems you wouldn't be asking if you did not find them good candidates in some way but you are saying now you have a different criteria for the disabled?

@Jarrett Harris That's kind of what I was hoping to do, have them as Option B. Wasn't sure of what I was allowed to do as far as keep them waiting.

3 people who dont work ..........

A stable job is key. I would wait until 30 days have gone by and reevaluate. Are you at market rent? Have you advertised on postlets?

@Ben Skove No debt that they have claimed (will do background checks with SmartMove once I have this figured out if it's worth my time). No other sources of income as I called to confirm that with him.

@Colleen F. I'm not sure on that. It's not about having a different qualification (although I could see how maybe that would be the case legally), it's more about the take-home pay they would receive being higher than 3x the monthly rent in gross income.

Depends..What type of rental history? What is their current rent? Why are they moving? Do they receive SNAP? I include SNAP in income because they will use to purchase food instead of cash$$. Also between the 3 they might have an additional $300-$500(SNAP)..My experience with fixed income tenants is good...

@Eddie Werner I think I'm pretty good on the price. The amount of interest in calls/emails that I've gotten make me believe that. I get a ton of interest, but haven't had many jump at it. Could be the price, but don't see why they would waste their time checking it out if they didn't like the price. I am actually planning to drop it to $825 as well, but keep getting calls at $850 so it's kept my hopes up there.

I have advertised using Postlets and Craigslist. I think most of my hits have come from HotPads and Zillow (via Postlets).

@Rolanda Eldridge Just the quick information I found online, they wouldn't qualify for SNAP in Indiana. They have paid rent on time for the last 5 years, but their rent was only $675/mo. They are moving because they are looking for a bigger house.

@Rodney Kuhl ..5 yr rental history/ timely payments..++++ in my book. They will probably divide the $850 three ways $284(from each check)...I would consider..They will probably stay 5 years...not a lot of turnover, because moving costly on fixed income...

@Rolanda Eldridge Right, I see all of those same positives. Just not sure if $850 + utilities is too steep. For how I spend my money, I know that's plenty of wiggle room. But not sure for them. Thanks for the insight!

Originally posted by @Colleen F. :
I am trying to figure out how 3 people in one family are permanently and totally disabled but aside from that you are looking at a 18% credit. I am wondering what the tax rate is at that income level if they were working.. You have to decide if you want to credit everyone this way. it seems you wouldn't be asking if you did not find them good candidates in some way but you are saying now you have a different criteria for the disabled?

SSDI is supposedly because your disability prevents you from working. But many recipients are far from totally and permanently disabled. If you've never encountered entire households on SSDI and SSI, consider yourself lucky.

I don't think the OP is suggesting a different criteria for the disabled, but wants to know if his applicants actually meet his criteria because they are applying with income that is received as net as opposed to gross.

I'm unclear if SSDI and SSI payments are totally income tax free, but I'm assuming they are?

@Account Closed I was unclear of that as well. He told me he takes his check straight to the bank and doesn't pay taxes on it at all.

For SSI Disability in my very recent experience they send you a letter with an amount , that is what the recipient gets. It wasn't possible to get a stub for direct deposit but since the letter = the direct deposit your recipients are likely correct. Again in my experience that amount changed (increased) when the adult recipients father died, don't know if could be adjusted downward but I doubt it. @K. Marie Poe I know that it is for not being able to work but that used to be the official definition permanent and total another words no taking back. I consider myself lucky not running into families like this it just seems strange.

If you qualify on a different amount it is technically a change to your criteria. You can say net income but it is a different criteria. I doubt someone will question it.

Payment history is the best qualifier as others have said but sounds like these are runner up candidates.

@Colleen F. Yeah, I agree on the runner up candidates. Thanks. I did receive the letters as verification from them, so I have that information on hand.

I only skimmed the replies so hope I'm adding somethng new and useful. What you are describing has some "risk" - i.e. The tenants don't make quite enough, so if a financial "bump" comes up in their lives, the rent might not get paid. What my wife and I do when we like a tenant, but they don't make enough, is that we "mitigate" that risk by asking for an amount equal to two times monthly rent. We decided if a tenant doesn't make enough, and CANT come up with an amount equal to 2x rent, then chances are high we'll be on the wrong side of the risk reward curve. Make sense? Higher risk? insist on higher return.

@Kenneth LaVoie Are you talking about 2 times the monthly rent as a security deposit? I'm not quite sure I understand... sorry.

"For the majority of people, Social Security Disability benefits are not taxable. This is true for people who have income in addition to disability benefits as well as those who do not. (Most of the one-third of disability recipients who do pay taxes on benefits receive SSDI benefits, not SSI. SSI recipients rarely have to pay taxes, because if they had enough income to be taxed, they wouldn't qualify for SSI.)"

Turbo Tax for the win. Also similar story on IRS's website but much less concise.

https://ttlc.intuit.com/questions/1531561-is-social-security-disability-considered-taxable-income

@Rodney Kuhl Consider this, their household income is not even 2.5x rent. I would pass. Set your criteria on gross income and ask for proof of gross income, it will make the calculation easier to grasp for all involved. Our minimum criteria states 3x the rent and that we will consider 2.5x with additional security deposit. This allows for some flexibility for the exceptional candidate who is just shy of making the 3x. Nothing you state leads me to believe they are good candidates.

Marcia Maynard, Fischer Properties | Podcast Guest on Show #83