Would you take this tenant who falls short of the income mark?

9 Replies

Got an app for an apartment today that didn't make enough, but here's the deal. rent is $1650, x36 (1/3 income for rent) is $59,400 required income. He just started a Federal job at GS-7: $47,374, and will make GS-9, $57,948 in one year.   He said he's been living with family since graduating college with an engineering degree (he's 24) and has socked away savings, I failed to ask how much. 

My nose says yes he'll be fine, but numbers don't. Should I ask for his bank statements? Is that legal? What is not legal in NJ is any form of required prepayment in excess of 1.5 months security.

Did you run a background and credit check? Not just for credit score, but for actually debt and monthly required payments. Those GS jobs jump up quickly. I know. I’ve had one for 22 years. I would almost always say no, but govt jobs are so reliable, I’d consider it (especially if no other quality applicants right away).

I’d go for it as long as everything else checks out ok and he doesn’t have other significant debt.  Ask his parents to sign a rent guarantee, then it’s no problem.

Thanks folks. Just ran his credit, 12k in student loans and an 800 fico, clean as a whistle.   @Anthony Wick , Any other applicant was just starting a new job I'd be nervous, but after all the hoops and background check he had to go through I figure they don't fire people capriciously. 

I'm doing it, nice kid.  This is one of the joys of having cute little apartments in a desirable area, a lot of my tenants are lovely young people just starting out who will end up making a lot more than me! There's no class warfare, I'm not "The Man". I had one mom tell me to keep an eye on her boy!

The purpose of screening is to determine the level of risk and see if it's acceptable. He would be paying about 40% of his income towards rent. He still has utilities, student loans (probably), car payment, etc. That's risky.

However, you said he is an engineer. Those are usually lower-risk people.

You also said he has "significant savings" so maybe he can pay a triple deposit (if your state allows) or the first few months in advance.

Originally posted by @Nathan G. :

The purpose of screening is to determine the level of risk and see if it's acceptable. He would be paying about 40% of his income towards rent. He still has utilities, student loans (probably), car payment, etc. That's risky.

However, you said he is an engineer. Those are usually lower-risk people.

You also said he has "significant savings" so maybe he can pay a triple deposit (if your state allows) or the first few months in advance.

 If he had no immediate prospect of higher income I'd agree, but he showed me $12k in savings, plenty to cover the gap till his raise, and his mother offered to co-sign.  NJ does not allow deposits in excess of 1.5 mo, so like a pet deposit must be added to security and the total not exceed 1.5 months. Like I said he's got $12k student debt, no consumer debt, no car loan. Utilities yes, but it's the 4th floor, a previous tenant said he rarely turned on the heat!

I would first verify that he has savings to carry him through any struggles he might have the first year. If the savings did not seem sufficient, I might see if his parents could co-sign.

This generally looks like a good applicant though.

Rent: $1650 per month.

Income: $3948 per month. (2.39 x rent) That's darn close to $4000 a month! That should be more than enough for his household of ONE.

Security Deposit: $2475 (1.5 x rent, the max allowed in NJ)

Good government job with opportunity for advancement. All else checks out too I assume. I wouldn't get hung up over him not making 3 x rent. We often accept applicants with less and ask for sufficient security deposit to cover our risk. Remain flexible and pay attention to your intuition. You should be fine.

I wouldn’t rent to someone eho makes less than 3x rent. Don’t forget about taxes too.