Hi Landlords,
I have a question. We're at the final stage to screen tenants. We're asking for the 2 latest pay stubs and bank statement to verify their income. And prove they have enough fund to pay the rent if they're out of the job next month. However, they do not feel comfortable to do so. They have great reference from the current landlord and great credit score. What would you do?
They said they can send us the offer letter as a proof of employment. I think it's reasonable. However, what about the bank statement? I understand it may not be comfortable to show us how much they have at the bank and the the bank account #. Is there any alternative method you'll use?
Thanks a lot!
@Hui Kiang That's a great question man. I feel like you know what to do, but you are just afraid of upsetting your tenants. The emotional and "feeling" aspect of this situation is not important. Your rules and requirements for a quality tenant should be solid as a rock and aren't some wishy washy thing that they can pick and choose what to follow and what to change. Don't let their emotions dictate your decisions. If you always listen to your tenants emotions and do things based on their "feelings" you will end up broke, end of story. That sounds harsh but you are running a business not a charity. Yes there is a time and place to focus on the emotional side of things but the tenant screening process is not a time to do so. If you walk into any well run, quality apartment complex and go through the application process and then tell them "oh no I'm not comfortable with giving my last 3 paystubs" they won't care and will say I'm sorry but those are our requirements have a nice day. They are running a business and are consistent in their screening. It is a process that stays the same and consistency is the key to success. My 2 cents is to tell them I'm sorry but these things need to be provided because that is what I require, and feel free to give and explanation of why you require it. Hopefully they will see why you need that information and will give you the needed info and end up being great tenants! If they say no just move on, there are plenty of other great tenants and plenty of other communities for them to live in. Good luck and trust your gut it is always right!
Do an employment reference check.
As part of the application process, there should be a page where they give you authorization to contact their employer.
Employers are used to these requests. A quick google search can verify the validity of the company. I always call the company's public phone numbers, not what the tenant supplied. Some applicants will try to fake employment and give out a friend's number who pretends to be the employer.
Could you meet in person and verify the account balance on their mobile device without having the paperwork.
Ask them what they can provide to bolster their application.
Do you have a real estate license or PM. This professionalism often eases peoples trust of disclosing these items. I know they are getting access to very high $$ asset for a small amount of rent. But from their perspective it is different.
Money in the bank to cover two months rent is mostly meaningless as they could go blow it all at Target as soon as the lease is signed. It is at best an indicator that they do have some money saved and hopefully would continue.
@Hui Kiang That's a great question man. I feel like you know what to do, but you are just afraid of upsetting your tenants. The emotional and "feeling" aspect of this situation is not important. Your rules and requirements for a quality tenant should be solid as a rock and aren't some wishy washy thing that they can pick and choose what to follow and what to change. Don't let their emotions dictate your decisions. If you always listen to your tenants emotions and do things based on their "feelings" you will end up broke, end of story. That sounds harsh but you are running a business not a charity. Yes there is a time and place to focus on the emotional side of things but the tenant screening process is not a time to do so. If you walk into any well run, quality apartment complex and go through the application process and then tell them "oh no I'm not comfortable with giving my last 3 paystubs" they won't care and will say I'm sorry but those are our requirements have a nice day. They are running a business and are consistent in their screening. It is a process that stays the same and consistency is the key to success. My 2 cents is to tell them I'm sorry but these things need to be provided because that is what I require, and feel free to give and explanation of why you require it. Hopefully they will see why you need that information and will give you the needed info and end up being great tenants! If they say no just move on, there are plenty of other great tenants and plenty of other communities for them to live in. Good luck and trust your gut it is always right!
Just like @Michael Guzik says, stick to your screening criteria. An offer letter is not good enough proof to verify income. What if they didn't actually take the job? What if there are garnishments being withheld from their paycheck, that makes their available income less than what they say?
Every renter knows they have to provide proof of income as part of an application process. If you are receiving push back on this totally normal landlord request, it is a red flag.
I would be leery of even asking for bank statement if they wont show you proof of income with pay stubs.
Thank you all for your feedbacks. End of they did provide the pay stubs. That makes me feel better.
There are quite a few applicants stop the application process after I ask for bank statement and pay stubs. They seemed to be all well qualified. Most of them are engineers. I'm quite surprised as this was not an issue 3 years ago.
Do you see this trend that people are more reluctant to show individual landlord these personal financial information? I know there are quite some news about identity theft. I'm seriously thinking I should get a realtor license to make this easier.
Thanks!
If they’re uncomfortable sharing full bank statements, one compromise I’ve seen is letting them redact sensitive info like account numbers or unrelated transactions and present only deposits and balances. Unless you want to see everything, you can still verify income this way. You can also ask for more income documentation instead. Tenants who don’t get traditional payroll use tools like thepaystubs to generate precise income records from their actual earnings.
I like rentprep. They can do average bank deposit verification over 12 months so that you can accept self-employment (1099) , gig work and side hustle income with more convidence. They are also very thorough on background checks