Tenant Wants to Pay with 401K Disbursements

[Amanda Palmer]

Hi there! I'm new here. My husband is the real guru, and I'm managing the properties we're acquiring. 

We're currently screening tenants for a duplex. One potential renter wants to pay with her 401k, requesting disbursements as she needs the cash. She attached a document with her application, showing she pulled $32,000 after taxes in January. Rent is $1150 plus utilities.

I asked for a bank statement. She said she does not have a bank statement showing any monthly disbursements or cash flow. She offered to pay in advance if needed.

I'm trying to be understanding, but this is new territory for me. What should I ask her for? Should something be specifically added in the lease regarding this? Are there any red flags?

Thank you in advance!

[Jeff B.]

HMM;  Does she understand the tax consequences of using 401k money before age 62.5?

As a landlord, we are not allowed to discriminate on the source of funds, but having an income is not the same.  

1. She said she does not have a bank statement showing any monthly disbursements or cash flow.

But does she have a bank or credit union statement at all? Tell her you're only trying to see how see pays her monthly bills.

I NEVER rent to someone attempting to pay yearly rent all up front - - I typically means they've just lost a job or their normal source of income.

I  would reject the application for "inadequate documentation".